MANAGEMENT PROCESS & ORGANISATION

Handout I

1. Functions of management

Various authors have defined functions of management in separate manners.

Henri Fayol has classified functions into:

1. Planning,

2. Organizing,

3. Commanding,

4. Coordinating and

5. Controlling.

Luther Gullick has used his POSDCORB (Planning, Organizing, Staffing, Directing,
Controlling, Reporting and Budgeting) approach to explain the same in a more comprehensive
manner.
In any organization, the managers have to perform certain functions in order to achieve the
organizations goals and objectives. The managerial functions can be grouped as below:

Functions
Include- Operative functions

Planning Forecasting, decision making, programming, Production

policy formulation, budgeting etc.

Organizing Functionalization, delegation, decentralization Marketing

and departmentalization etc.

Staffing Recruitment, selection, training, man power Purchasing

forecasting, compensation planning, promotion
etc.

Directing Supervision, communication, leadership, Financing

motivation etc.

Controlling Making standards, reporting, recording Personnel

measurement and corrective action

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PLANNING
This is the most basic function of management. A manager plans prior to action and thus planning
precedes other functions.
Planning involves:

(a) Determining the objectives

(b) Selection of action plan (what, when, where, how and by whom)
(c) Looking ahead into the future
Since planning requires use of foresight, top management is involved in this to a great extent.
Planning is of the following types:

Short term
Long term
Characteristics of Planning:

1. Goal oriented
2. Planning is a Primary function
3. Planning is all-pervasive
4. Rational process
5. Continuous process
6. Forward-looking
Advantages of planning
The Planning Process
(a) It lays attention on objectives and results
(b) It enables to do things in an orderly and effective manner
(c) It helps in achievement of goals
(d) It helps in facing uncertainty and change
(e) Reduces risk
(f) Provides sense of direction
(g) Helps in coordination
(h) Facilitates control

ORGANISING
Determine Develop Planning Identify
Evaluate
After formulating plans, the next step is organizing. Organizing is identifying and grouping the
Objectives Premises Alternatives Alternatives
activities, dividing them amongst individuals and making harmonious authority-responsibility
relationships among members of the enterprise.

Formulate Derivative Select a course 2

Plans of action
Nature of Organizing
The main characteristics of organization as a structure are:

1. Common purpose
2. Division of labor
3. Authority structure
4. People
5. Communication
6. Coordination
7. Environment
8. Man-made
9. Environment
10. Rules and regulations

Process of Organizing
The process of designing organization structure involves the following steps:

a. Identification of Activities

b. Grouping of Activities

c. Assignment of Duties

d. Delegation of Authority
Advantages of Organization

(a) Makes Administration easy.

(b) Encourages growth and diversification.
(c) Helps in technological improvements.
(d) Facilitates good human relations.
(e) Fosters coordination.

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 FACTORS IN ORGANISATION
DESIGN

PEOPLE

TECHNLOGY ENVIRONMENT

STRATEGY
STAFFING
Staffing is the process of filling all positions in the organization with adequate and qualified
personnel. It is a managerial function of attracting, acquiring, retaining and developing the human
resources required by an organization.

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Staffing consists of:

(a) Manpower planning

(b) Recruitment
(c) Selection
(d) Training
(e) Compensation
(f) Employees maintenance
(g) Appraising and counseling
Advantages:

(a) Required Personnel of required skills are available at the right time.
(b) Persons with potential are discovered.
(c) Introduction with different jobs at the same level of responsibility.
(d) Transmission of required knowledge and skills.
DIRECTING
Directing is a managerial function, which aims at attainment of planned targets by:

(a) Guiding
(b) Supervising
(c) Motivating
(d) Leading people
Directing is the executive function of management since it involves execution of plans and
policies. A manager in order to direct his subordinates has to take necessary steps in order to
ensure that the employees are working according to the established plans.
Directing function of management includes-

(a) Issuing orders and instructions

(b) Supervising people
(c) Motivation i.e. encouraging to work for certain objectives.
(d) Communicating with employees regarding plans and their execution.
(e) Influencing the behavior of employees.
Characteristics of Directing function

1. Pervasive Function-Performed by all the managers at all levels of the organization.

2. Continuing Function-On-going process as it continues throughout the life of an
organization.
3. Linking Function-Connecting link between preparatory functions (planning, organizing and
staffing) and controlling.
4. Creative Function-Directing converts plans into performance.

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5. Human Factor-Directing is the interpersonal aspect of managing by which subordinates are
lead to understand and contribute effectively and efficiently to the attainment of enterprise
objectives.
6. Chain of Command-Directing initiates at the top level in the organization and follows to
bottom through the hierarchy.

Advantages:

(a) Initiates action

(b) Ensures coordination
(c) Improves efficiency
(d) Facilitates change

(e) Helps in maintaining stability and growth.

CONTROLLING
Controlling is the process of ensuring that the organization is moving in the right direction and
that progress is being made towards achievement of the organizational goals and objectives.
According to Koontz and ODonnell:
Managerial control implies the measurement of accomplishment against the standard and the
correction of deviations to assure attainment of objectives according to plans.
The process of controlling involves the following steps:

(a) Establishing standards in order to evaluate performance

(b) Comparison of Actual performance with Standards.
(c) Finding reasons for variance between the two
(d) Taking remedial action for correcting deviations

Nature of Control

The main characteristics of managerial control are as follows:

1. Control process is universal.

2. Control is a continuous process.
3. Control is forward looking.
4. Control involves measurement.
5. Control is an influence process.
6. Management control is a system.
7. Control is goal oriented.
8. Control is best aimed at results not at people as such.

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Elements of Control

Planning
Information Feedback
Delegation of authority
Remedial Action

MEET
STANDARDS

STANDARDS OPERATIONS
PLANNING (ORGANIZING & PERFORMANCE
DIRECTING)

DOES NOT
MEET
STANDARDS

CORRECTIVE
ACTION
Fig. The Control Process
Advantages:
(a) Guide to operations
(b) Quality of various plans can be verified
(c) Managerial Accountability
(d) Employee Morale
(e) Ensures actions proceeds according to plans.
The contribution of each of the above functions does not remain the same across all levels of
management. The following diagram shows how the functions vary across organizational levels:

Top Plannin
Management g Organisin
g
Middle Staffing
Management Directing
Controllin
g 7
Supervisory
Management
 2. Management a science or an art
Management is a Science as well as an Art. The theory (science) and practice (art) of
management go side by side for the efficient functioning of an organization.
MANAGEMENT AS A SCIENCE
Management is a science because it contains all the essentials of science. The important elements
of science are as follows:

(a) Science is a systematized body of knowledge. .It establishes cause and effect relationship
between different variables.

(b) It includes principles and theories, which have been developed through continuous
observation, experimentation and research. They have evolved through practical experience
and theoretical research over several decades. These principles and theories are now available
in every area of management.
For instance: There are several principles to serve as guidelines for effective delegation of
authority.

(c) The principles have Universal applicability i.e. they can be applied under different situations.
The principles can be verified and they lead to predictable results. They have a wide and
repetitive range of application.
For Example: Application of management theory can be demonstrated through the quasi-
laboratory method of case studies.

(d) The organized body of knowledge can be taught as well as learnt in the classroom and outside
like in industry.
Examples: Physics, Chemistry are some examples of science.
Nature of Science of Management:

Social Science
Management is a social science like economics as it involves the study of human behavior.
Living and complex human beings in different situations and circumstances cannot be tested
through experiments. Therefore, the principles of management are not hard and fast laws. On
the contrary they are flexible i.e. they can be modified in different situations.

Inexact or soft science

Management scientists cannot explain clearly why and how a human being behaves in a
particular way and will he behave in the same way in future. The Human and Environmental
element in management makes it an imperfect science.

Applied Science
A manager has to apply the principles just like a medical or legal practitioner.

Inter-disciplinary science

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 Management uses knowledge from several other sciences like Economics, Mathematics, and
Sociology.

MANAGEMENT AS AN ART
Art involves the practical application of personal skills and knowledge to achieve desired
results .The function of art is to effect change and to achieve desired results. Art is essentially
creative and is practice-based.
The main elements of an Art are:

(a) Personal skills,

(b) Practical know-how,

(c) Result-orientation,

(d) Creativity,

(e) Constant practice aimed at perfection

Management is an art because of the following reasons:

a) Like an artist, a manager applies his knowledge and skills to coordinate the
efforts of his people.

b) Management aims at achieving practical results. e.g., profits, growth etc.

c) Just like any other art, management is creative. New situations are introduced and
resources are converted into output.

d) Management is a personalized process. Depending upon his understanding and

environmental conditions, a manager adopts his own approach while handling various
problems.

e) An efficient management results in realization of organizational and other goals.

CONCLUSION:
Management is therefore neither exclusively an art nor exclusively a science but a combination of
both.
The science and art facets of management are not conflicting but are complementary to each
other.

3. Effective managerial leadership

Various authors have defined leadership in different manners. Some of such definitions are:
Leadership is the art of influencing people to strive willingly for group objectives George R.
Terry

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influencing people to follow the achievement of a common goal. It is the ability to exert
interpersonal influence by means of communication towards achievement of goal Koontz &
ODonnell
Effective managerial leadership involves the following:

(i) Setting of goals The leader makes the goals that he and his team are to attain. This is
also explained to the members of his team.

(ii) Motivation of employees Effective leadership triggers an urge for accomplishment and
transforms potential into performance. The effective leader creates
and maintains an environment conducive to high performance. This
in turn helps employees to get motivated to work hard.

(iii) Building morale An effective leader shapes the thinking an attitude of the group and
maintains the group discipline. He develops good human relations
and facilitates interaction between the group members.

(iv) Creating confidence Effective leadership creates and sustains enthusiasm amongst the
followers. It also provides advice and guidance by which the
subordinates can recognize and develop their capabilities. He serves
as a friend philosopher and guide.

(v) Maintaining discipline In any group, it is important to follow rules, regulations and
procedures that are necessary for the attainment of objectives.

(vi) Developing teamwork Effective leadership helps to unify individual efforts. It acts as a
cohesive force that binds the group together. It fosters mutual
understanding and team efforts.

(vii) Facilitating change It acts as a corner stone of organizational change and development.
In a world of change and uncertainty, effective leadership becomes a
vital element in the very process of change itself.

(viii) Representing the group A leadership represents the group to the outside world, thus
serving as their spokesman and protecting their interests.
Effective leadership is a product of many forces that act and interact simultaneously. It achieves a
certain degree of integration of these varying and complex forces. This can be depicted in the
following diagram:

LEADER
Leaders values
Confidence in followers
General preferences
ENVIRONMENT FOLLOWERS
Social & cultural Knowledge &
Economic & experience
political Interest &
Community involvement
influence ORGANISATION
Structure & pattern of work
activities 10
Technology
Specialization
Thus, an effective leader:

Inspires an employee
Accomplishes work and develops the employee
Uses positive approach
Coaches and mentors the employee
Associates himself with the team
Assumes obligation
Shares responsibilities for rights and wrongs done by his team

It is important for any organization to make its managers effective leaders. For this, one or more
of the following measures can be adopted:

i.) Training: Leadership training programs offer specialized training to the

managers and help them to become effective leaders. It gives insights and experiences
on behavioral, counseling and interpersonal skills.
ii.) Internal organization exposure: This involves exposing mangers to critical
situations within the company itself.
iii.) Autonomy and accountability: Managers maybe able to sharpen their skills
when given relative freedom for decision making.
iv.) Opportunities for interaction: Improving communication with subordinates
help the managers understand them better and thus help address their issues in a more
effective manner.
v.) Setting goals: It is important that the goals set are challenging as well as
realistic. This motivates the employees to strive harder to accomplish them.
vi.) Job rotation: Systematic and planned rotation in the job helps in better grooming
of the managers.
To summarize, effective leaders are both people as well as task oriented. They seek to
direct the group towards high efficiency and productivity.

4. Effective communication in an organization

Communication means the process of passing information from one person to another. It is an
exchange of facts, ideas, opinions, and emotions by two or more persons.
In order to make the communication effective in an organization, following points must be kept in
mind:

Channel

Source Sender Message Receiver Result

Sent Received

Noise 11
Clarity: Clarity of thought is the first essential of good communication. The message must be
perfectly clear and free from all ambiguity.

1. Language: It should be simple and precise which the receiver can understand easily.
Technical jargon and high sounding words should be avoided.

2. Completeness: The message must be comprehensive and adequate. Incomplete message

creates misunderstanding and delays actions.

3. Brevity: All communication should be brief. Meaningless words and information overload
spoil a message. Unnecessary repetition and over-elaboration should be avoided.

4. Timeliness: The message should reach the receiver at the right time. A message, which fails
to reach the receiver in proper time, is useless. The media used should be proper.

5. Compassion: In order to communicate effectively, the communicator must understand the

intelligence level and background of the receiver. He must know what information the
receiver exactly needs and in what form.

6. Integrity: The message sent must be consistent with the objectives, policies and programs of
the organization.

7. Feedback: Communication is a two-way process. There should be follow up action to ensure

that the message is rightly understood.

8. Attention: Careful listening is essential for effective communication. The communicator

should try to secure the individual attention of the communicatee. He should convey the
message in such a way that the emotions and sentiments of the receiver are not hurt.

9. Strategic use of Grapevine: A manager should make use of his grapevine to supplement the
formal channels of communication. He must understand the informal communication
networks and should make their intelligent use to fill up gaps in formal communication
system.
In addition to the above points, there are special aids for promoting free and frank
communications. Open-door policy and participation in social functions are unstructured
informal aids. Suggestion scheme and personnel counseling are structured or formal aids for
communication.

5. Principles of effective communication

In order to make communication system effective, the following factors or principles must be
followed:

Principle of clarity-The idea to be transmitted should always be in easily

understandable language.

Principle of attention-Communication requires that the receiver of message

should understand the message. It is possible only when the recipient pays attention to the
message being communicated.

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 Principle of consistency-Communication should always be consistent with the
plan, objective, policies and programs of the enterprise.

Principle of adequacy-The information being sent should be adequate and

complete in all respects. Incomplete or inadequate information delays actions and
destroys understanding and relations.

Principle of integration-The main objective of effective communication is to

integrate the effort to strengthen the organization by achieving the common objectives of
the organization.

Principle of timeliness- the information or ideas must be conveyed at the proper

time. Any delay in this will result in the documents loosing its importance.

Principles of informality- Formal communication channels are very important

and useful to the organization but informal communication also plays an important role in
spreading information. In certain situations, managers should try to be informal in their
behavior with subordinates.

Principle of feedback-The communication must have feedback confirmation

from the recipient whether the messages have been understood by the recipient in the
same sense in which the sender takes it for, and also whether the recipient is agreed or
disagreed to this proposal of the sender.

Communication networks-It refers to the routes through which the

communication flows to the destination, person for whom it is intended. Management
should consider the effectiveness of the communication and morale of the communicatee
before it should figure out such network.

Principle of economy-The communication system must be as economical as

possible but not at the cost of the efficiency of the system.

6. Overcoming listening barriers

The following steps may be taken to overcome listening barriers:

Clarity-The message must be perfectly clear and free from all ambiguity. The
language used should be simple and precise which the receiver can understand easily.
Technical jargon and high sounding words should be avoided.

Completeness-The message must be comprehensive and adequate. Incomplete

message creates misunderstanding and delays actions.

Brevity-All communication should be brief. Meaningless words and information

overload spoil a message. Unnecessary repetition and over-elaboration should be
avoided.

Timeliness-The message should reach the receiver at the right time. A message
that fails to reach the receiver in proper time may turn out to be useless. The media used
should be proper.

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 Compassion-The communicator must understand the intelligence level and
background of the receiver. He must know what information the receiver exactly needs
and in what form.

Integrity-The messages sent must be consistent with the objectives, policies and
programs of the organization.

Feedback-Communication is a two-way process. There should be follow up

action to ensure that the message is rightly understood.

Attention-Careful listening is essential for effective communication. The

communicator should try to secure the individual attention of the communicatee.

Strategic use of Grapevine-A manager should make use of his grapevine to

supplement the formal channels of communication.

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 7. Grapevine

Informal Communication (Grapevine)

Communication in any organization may be formal or informal in nature. While formal channels
are those established by the structure of the organization, the informal channels takes place
outside this.
Informal communication is technically known as the grapevine. It takes place in informal and
inter-personal contacts among employees. Members of informal groups pass on information and
opinions to each other as well as to other informal groups. Informal communication transcends
the barriers and boundaries of the formal channels. It is multiple in nature, the same person
having social relationships with several other persons in the organization. It exists outside the
official network but continually interacts with the formal communication. A grapevine is
structure-less and information passes through it in directions.
Grapevine has the following characteristics:

(i) It arises from social interactions among people.

(ii) It is a natural and normal activity due to desire of the people to talk to
one another.
(iii) It generally operates like a cluster chain as every person tells in turn
many other persons.
(iv) Only a few persons are active communicators in it. These can be called
liaison individuals. People are active on the grapevine when their own interests
and interests of their friends are involved.
(v) It operates at a fast speed because it functions through word of mouth or
observation.
(vi) Grapevine functions partly in a predictable manner that offers managers
a chance to influence it.
Advantages of grapevine are:

(i) Helps in developing better relations amongst employees.

(ii) Has a flexible and personal nature, and hence fills in gaps arisen in
formal channels of communication.
(iii) Has a fast speed.
(iv) Links persons not in official chain of command.
(v) Serves as an important feedback channel, if utilized effectively.
Apart from the above advantages, the limitations of informal communication are the following:

(i) It is not authentic.

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 (ii) Is prone to distortion.
(iii) May give rise to rumors in the organization.
(iv) It is difficult to pinpoint responsibility.
(v) May result in leakage of confidential information.
It is apparent that management cannot eliminate grapevine in an organization. But by keeping the
informal groups informed about concerned organizational matters in a systematic way, it can use
the power of the grapevine to disseminate information.

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The following types of grapevines commonly exist in any organization:

Single Strand
Communication is through
intervening persons in a string.
Thus information is passed
through persons who are in
form of a strand.

Gossip
Non selectively, one
representative communicates
with the other.

Probability
Communication is done
randomly with others
according to laws of
probability.

Cluster
Communication is selective
with those the employee can
trust. Thus different such
clusters are formed in the
organization.

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 7. Motivation
Motivation is one of the most important factors in determining organizational efficiency.
Motivation is the process of steering a persons inner drives and actions towards certain goals and
PERFORMANCE = ABILITY X MOTIVATION
committing his energies to achieve these goals. It is characterized by a personal and internal
feeling that produces goal-directed behavior. Motivation is thus a continuous process. It is
complex and is system-oriented.
It is very important for the shop floor workers to be motivated during their work. This results in:

Higher efficiency

Low absenteeism

Low turnover

Facilitates change

Cordial human relations

A better corporate image

The following techniques can be employed to motivate shop floor workers:

(a) The first and foremost thing that comes to mind is looking at monetary
incentives. Though money tends to be a potent motivator, it is only a short term
incentive. Ideally, monetary benefits should be linked to productivity and should
prove as an incentive for working harder and maintaining set quality standards. Apart
from individual productivity, parts of profits of the company should also be shared in
form of profit sharing incentives.

(b) Job is also a big motivating factor. Challenging work provides job satisfaction
and inspires the worker to work harder. Methods like job rotation, job enrichment
etc. help better the job content. In assembly line setups, job at shop floor level gets
very monotonous. Hence such measures carry a great significance.

(c) Recognition and status implies giving acknowledgement and appreciation of

good work. Schemes like kaizens, suggestion scheme, and quality circle are tools
used in Japanese companies to inspire creativity amongst employees and inspire them
by giving rewards for good work and cost saving to the company.

(d) Economic security is a prime concern to the workers. By ensuring that they are
secure in the job gives a feeling of belonging to the workers. The concept of lifetime
employment followed by the Japanese companies has proved itself.

(e) Responsibility brings about independence in working and hence more ownership
to the job. One way of achieving this on the shop floor is by having a cellular
production concept wherein a group leader is chosen from amongst the workers by
rotation. He is responsible for the performance of his cell.

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(f) Healthy competition brought about by competing for quality, maintenance and
cleanliness also ensures greater participation by the workers as well as a higher
productivity.

(g) Promoting deserving workers to supervisors can provide opportunity for growth.

(h) Training of workers can make them multi-skilled. If conducted successfully, it

will also make them understand their contribution to the company in a broader
manner.

Monetary benefits

Job enrichment
Multi-skilling

Job security

Responsibility

Healthy competition

Opportunity for growth

Participation

Training

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 8. Role of synergy towards team and group building
SYNERGY is the concept that the combined effect of certain parts is greater than the
sum of their individual effects.

For Example: Product 1 contributes X and product 2 contributes Y. If they are produced together,
they may contribute X+Y+Z. Z is the synergistic effect of X and Y being brought together. Z
represents positive synergy.
There can be negative synergy as well. The study of synergy helps in analyzing new growth
opportunities.
The concept of synergy can be used to motivate members of an organization to work efficiently and
effectively towards the attainment of organizational objectives. If synergy is the mission of the
organization, team building is a means to achieve the end.

9. Teams or groups or both or none towards organizational effectiveness

Man is a social animal and prefers to live and work in groups. A group is an aggregate of persons
with close inters relationships. A group is a cluster of two or more individuals who interact with each
other on a relatively enduring basis, identify themselves as belonging to a distinct unit and who share
certain common activities, interest, values and goals. Members of a group relate to one another in
some common ways and united by some common ties on a sustained basis. A group is different from
a crowd which has no structure and performs no specific function. The members of a group interact
with one another to jointly pursue common goals. An organization consists of several types of
groups. Every member of the organization belongs to one or more groups.

TYPES OF GROUPS:

Primary and Secondary Groups

Small and Large Groups

Formal and Informal Groups

If a product or technological break through generates a family of products which move through
successive stages of new and improved products, the temporary task force concept is ineffective.
Next step is to create permanent teams which consists of representatives from each functional
department the teams meet regularly to resolve inter departmental issues and to achieve coordination.
When not involved with issues associated with new product development, the team members work on
their regular assignments.
Teams are an important means to organize work activities. When management uses teams as its
central co-ordination device, we have a team structure.
Conclusion: Groups are powerful in changing the behavior, attitudes, values and in disciplining
members. Groups can also be used for decision making, negotiating and bargaining. Groups also

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influence communication patterns. One can hardly consider a number of people as a team when each
member communicates only with the boss. Effective group interactions also effect motivation. A
group concept helps in understanding the interactions between leaders and followers as well as
among all group members. Team work towards a goal under a leader. Therefore for organizational
effectiveness both groups and teams are required.

10. Decision-making
Decision-making is influenced by two parameters, namely its acceptability and its quality. Based on
these, decisions can be of four types. These are shown in the following diagram:

(a) Flip of a coin decision:

Flip of coin is a decision associated with low quality and low acceptability. It refers to

High Group Ideal

Decision Decision
Acceptabilit
y of
Decision
Flip of
Low Experts
Coin
Decision
Decision
Quality of Decision
Low High
unprogrammed, unstructured decisions taken on the spur of the moment without any conscious
thought or analysis.

(b) Group decision:

It is a decision associated with low quality and high acceptability. A group decision is jointly arrived
at by the members of the group where each person is allowed to express his views and opinions on
the subject and a consensus is arrived at.

(c) Experts decision:

It s a decision associated with high quality but low acceptability. An Expert decision is the one taken
by an individual on the basis of the superiority of his knowledge, education, skills, experience etc. He
possesses an expertise which enables him to take on the responsibility of decision making.

(d) Ideal decision:

An ideal decision is a high quality decision which even has a high acceptability. It is taken carefully
and objectively taking all the points into consideration.

10. Role of spiritual needs towards motivation

Human needs can be classified in two categories:

(1) Primary needs

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(2) Secondary needs
Spiritual needs come under Secondary or Acquired needs. Such needs are related to mind and spirit.
Mainly these needs develop as one matures or gets education. Social environment and time gets them
realized. Human beings tend to create happiness in their surroundings.
Secondary needs may be:

Social Needs
Egoistic Needs
Secondary needs make the efforts of the manager complicated because they vary among people much
more than primary needs. Secondary needs develop a variety of motives in each person and are often
hidden so that he himself cannot recognize them.
Both primary and secondary needs exist in a person at the same time and it is very difficult to
differentiate among the various needs. Motivation of workers is concerned with the satisfaction of the
various needs. The manager should try to analyze the various needs and take the appropriate steps to
satisfy them in order to motivate the workers to achieve the organization objectives.

11. Mintzbergs design configurations with respect to structure of an organization

The difficult task of linking business strategy to organization design is simplified by the application
of Mintzbergs typology for the integration of structure and contingency factors. He believed that
every organization has a configuration of five parts. Top management is created at the top of each
organization. Middle management is found at the intermediate level. At the bottom is the technical
core consisting of lower level managers and workers who carry out the organizations main mission.
The function is the chain of command that runs from top management to the technical core. There is
also a group of technical and professional staff personnel staff personnel who are engineers,
researchers and system analysts who assist in the creation of many plans and controls that are applied
to the technical core. Finally the administration staff performs such indirect services such as
maintenance, accounting and clerical. Their relative size of each of these parts is determined by the
organization environment, technology, goals and structures.
Mintzbergs design further proposed that each of these five organization components fit together in
five basic forms:

(a) Simple Structure: The organization is simple with the top managers and only a few workers.
There may be a very small administrative staff but probably no technically professional staff.
Decision making is highly centralized, co-ordination is informal, division of labour is minimal
and workers perform overlapping activities. This type of structure adapts well to changes in the
environment and its goals are stress survival and innovation.

(b) Machine Bureaucracy: It is usually a large company organized along functional lanes with little
lateral co-ordination. It features bureaucratic principle with heavy specialization, many rules and
regulations, centralized activity, large technical/professional staff and formalized process. The
technology is usually routine service and main production. The machine bureaucracys
environment is generally stable and its goal is to improve external efficiency.

(c) Professional Bureaucracy: This is usually a big functionally designed business that employs
professional people for the delivery of a non routine service technology i.e. hospitals and
universities. Although highly formalized they also decentralize much of the decision making
authority to those professionals that actually perform the non routine service. They operate in
complex but relatively stable environment and focus on such goals as innovation and quality.

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(d) Divisionalized form: The type of organization is similar to the divisional approach to structure.
Typically this is a large organization that is broken down into product or market sub-units with
few lateral coordinating devices although corporate level personnel provide some liaison service.
Decision making is decentralized and each division remains fairly autonomous. The environment
tends to be stable although the market mix may be complex. The technical support staff
concentrate at corporate headquarters and provides service for all divisions.

(e) Autocracy: It is much like the matrix form and evolves in complex and changing environments
in which the technology is not sophisticated and coordinated by both vertical and horizontal ends.
Structure tends to be informal and authority is centralized. The major coordination comes from
dual chain of command. Administration staff is large but technical staff tends to be small.

12. Organizations structure and design affects attitude, behaviour and work performance of
its employees.
Organization design is the process by which managers create a structure of tasks and authority. The
form and characteristics of an organization structure vary depending upon the attributes such as
division of labor, departmentalization, span of control and authority.

Division of labor is the extent to which the organization work separated into different jobs to be
done by different people.

Departmentalization is the process of the related function or major work activities in to

manageable units to achieve more effective and efficient overall coordination of organization. It
can be departmentalized on the basis of function, product, customer, territory and project.

Span of Control indicates the number of people directed or managed effectively by a supervisor.
However organizations must give due consideration to similarity of functions, geographical
closeness of subordinates, complexity of functions, direction and control required by
subordinates, etc in establishing the span of control.
The authority is the legal power to command or extract action from others. Since managers get work
done through others, authority constitutes the key to the managers job authority in the sense is thus
shared by the manager with the right to command.
Delegation of authority takes place when organizational power is given to subordinates by a superior.
It plays an important role in the organization as it relieves the manager from performing rest time
duties, provides motivation to the subordinates and thus develops the subordinates. However, certain
amount of centralized control is essential as it provides a feeling of prestige to the manager, power
cost, tightens control and results in greater uniformity of policy and practices.
The new organization design developed in the recent years to enable the organizations to compete
effectively are the:

a) Team structure in which the team is used as the central advice to coordinate work activities.

b) Virtual Organization: It is small core organization that out sources major business functions.

c) Boundary less organizations: An organization that seeks to eliminate the chain of command have
limitless spans of control and replace departments with empowered teams.

23
d) Feminine organizations: An organizations characterized by humanistic treatment of individuals
non opportunism careers defined through service to others, commitment to employee growth,
creation of a caring community and power sharing.
Thus an organization structure is a set of formal planned relationship between grouping of similar
functions and between the physical factors and human beings required for the performance of these
functions.

13. Team versus Groups

Groups and Teams are not the same thing. Group is two or more individuals interacting and
interdependent who have come together to achieve particular objectives. A group work is a group that
interacts primarily to share information and to make decisions to help each member perform with in
his or her area of responsibility. Work groups have no need or opportunity to engage in collective
work that requires joint effort. So their performance is merely the summarization of each group
member's individual contribution. There is no positive synergy that would create an overall level of
performance greater than the sum of the inputs.
A team generates positive synergy through coordinated effort. Their individual effort result in a level
of performance that is greater than the sum of those individual inputs. The extensive use of teams
creates the potential for an organization to generate greater outputs with no increase in inputs.
Nothing inherently magical in the creation of team assures the achievement of positive synergy.
Merely calling a group teams does not automatically increase its performance. If management hopes
to gain increase in organization performance through use of teams it well need to ensure that their
team possess these characteristics. Team building is an attempt to assist the work group in becoming
adapted by learning how to identify, diagnose and solve its own problems. Team building is one of
the powerful and well accepted techniques of organizational development. A team can be considered
as a number of people organized around a set of objectives. Many organizations are involved with the
introduction of team work. In a typical team building program employees belonging to same work
group discuss the problems relating to their task performance. Members provide information about
their individual perceptions of the problem. Having diagnosed the problem, action plans are
formulated and implemented to overcome the difficulties. In the final or concluding sessions impact
of the plans is assessed.
Team building helps to improve the organizations problem solving and decision making skills. It also
improves interpersonal relationships and communication systems. However team building fails to
consider input organizational variables such as technology and structure. It becomes a complicated
exercise especially when new groups are formed. The following are some of the benefits through
team work:

a) Increased employee motivation

b) Higher levels of productivity

c) Increase employee satisfaction

d) Common commitment to goals

e) Improved communication

f) Expanded job skills

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 g) Organizational flexibility
15. Management

Management can be read as MAN /AGE/ MEN/ T

Managing the human resources with experience and tact is Management.
Peter Drucker defines management as
A function, a discipline, a task to be done, and managers practice this discipline, carry out
functions and discharge these tasks.
Thus, management refers to an intricate set of functions and processes designed to initiate and unify
group effort in a meaningful manner directed towards pursuing certain goals. This involves 5 Ms of
management which are:

Materials
Man

Management
Methods

Money

Machinery

The various components of management are:

a) Organizational activity: To co-ordinate group behaviour amongst organizational

teams.

b) Goal Formation: Defining goals and objective for the team of people.

c) Goal accomplishment & evaluation: Once the goal is decided, to see that it is
accomplished with the given resources being utilized in an effective manner.

d) Organizational survival: To make the organization competitive, and to be able to

forecast and adapt to the change in environment.

25
 e) Implementation: Policies and programs to achieve the above.
The various characteristics of management are:

i) It is a universal process: Fundamentals of management are equally applicable in all

organizations.

ii) It is purposeful: Exists for the achievements of a specific purpose that is attainment
of pre-determined objectives or goals.

iii) It is creative: For optimal utilization of resources, , managers may have to break out
of the conventional thinking process and adopt innovative approaches.

iv) It is a unifying force: Management reconciles individual objectives with

organizational goals.

v) It is a social process: Being concerned with people and their inter-relations, it

concentrates on group activity.

vi) It is multidisciplinary: Management thrives upon knowledge gained from other

disciplines like engineering, sociology, psychology and economics.

vii) It is an art as well as a science: It is a systematic body of theoretical knowledge as

well as its practical application.

viii) It is intangible: Management cannot be seen or felt. However its effect can be felt
across the organization.

16. Manager

A manager is a person who manages men, plant, material, methods, money, machinery and
other miscellaneous resources available at his discretion/disposal efficiently and effectively
towards achievement of organizations goals.
A manager is a person in an organization that leads a team of subordinates to accomplish a task/ goal/
objective by using certain resources.
In discharging the above, a manager has to assume different roles. These are:

Figurehead Discharge of duties given to a manager by virtue of his office e.g. making
speeches.

Leader Relationship of the manager with his subordinates.

Liaison Relations with outsiders.

Monitor Seeking and receiving information for his organization

Disseminator Transfer of information

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 17. Leader

A leader is a person who by virtue of his personality traits or charismatic personality or on

beckon call influences a group of people to have their willing participation towards
achievement of organizations goals.
A person can be called a leader only when people accept him and agree to be influenced. The leader
must be an active participant in the activities of the group. There must be community of interest
between the leader and his followers. A leader seeks to make the followers strive willingly to
accomplish group objectives. A leader influences his followers willingly not by force or coercion. A
leader shows the way by his own example. He is not a pusher but sets an ideal before his followers by
his personal conduct.
According to Urwick , it is not what a leader says, still less what he writes that influences his
subordinates. It is what he is. And they judge what he is by what he does and how he behaves.
A leader is one who holds a sway over the attitudes, actions and behavior of a group of persons.
Followers may also influence the attitudes and behavior of the leader to some extent by interacting
with him. A leader is at the center of the groups power structure. He derives his power from superior
knowledge or experience, formal authority, charisma, distinct personal traits, resources for rewards
and punishment.
In order to become a leader, a person must possess certain qualities or traits. Some of these traits are
as follows:

(i) Physical qualities-Sound health, vitality, endurance, physical and nervous energy,
enthusiasm.

(ii) Intellectual qualities-high intelligence, sound judgement, ability to teach, scientific approach,
decisiveness

(iii) Moral qualities- integrity, fair play, moral courage, will power, sense of purpose.

(iv) Social qualities-ability to inspire, tact, persuasiveness, self-confidence, empathy, initiative,

knowledge of human nature.
Conclusion:
A leader-

Inspires the employee

Accomplishes work and develops the employee

Uses positive approach, We will work it out together. What do you suggest?

Coaches the employee, shows him how to do his job

Says we

Assumes obligation

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 Fixes the blame for loss in production or sales on himself.

18. Manager-Leader concept

Quite often leading and managing are considered as synonymous terms. Both require several qualities
or traits and both are processes involving interpersonal relations. Both involve setting goals and
mobilizing resources. But in reality there are several differences between leadership and
management:

1. Relationship-Management implies superior-subordinate relationship. This relationship arises

within organizational context. On the other hand, leadership can occur anywhere within or
without organization context. For example: A mob can have a leader but not a manager. Informal
groups have leaders but not managers. Leadership is possible in both formally organized as well
as unorganized groups. But management is possible only in formal and organized groups.

2. Source of Influence-A manager is appointed and he obtains authority from his position. He
makes use of his formal authority to influence the behaviour of his subordinates. On the contrary,
a leader is not always appointed and he derives his power from his followers who accept him
their leader. A leader makes use of this power to influence the attitudes and behaviour of his
followers.

3. Sanctions-A manager has command over the allocation and distribution of rewards (positive
sanctions), e.g., promotion and punishments (negative sanctions), e.g., demotion. On the other
hand, a leader has command over social satisfaction and related task rewards.

4. Basis of Following- Both managers and leaders have followers. But the people follow them for
different reasons. People follow a manager because they are required to follow by their job
description supported by a system of rewards and penalties. On the contrary, people follow the
leader on voluntary basis. If there are no followers there can be no leader. But a manager may be
there even if there are no followers but only subordinates. A manager may continue in office so
long as his performance is considered satisfactory. Whereas a leader can survive as long as
followers accept him.

5. Accountability-A manager is accountable for his own behavior as well as for the job behavior of
his subordinates. His accountability for performance is clearly defined. But there is no clear-cut
accountability relationship in leadership as a leader is not accountable for behavior in the same
way. A manager seeks to achieve organizational goals but a leader is more concerned with group
goals and members satisfaction.

6. Functions-A manager performs all the functions of planning, organizing, staffing, directing, and
controlling. On the other hand, the main job of a leader is to guide and inspire the efforts of his
followers.
Conclusion: A leader need not be a manager but a manager must have many of the qualities of a
good leader.

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19. Role of a manager

Managerial Roles
The job of a modern manager is very complex and multi-dimensional. Therefore, a manager has to
play several roles to perform his job effectively and efficiently.
Mintzberg has identified ten roles of a manager, which are grouped into three categories. For
example, status, as manifested in the interpersonal roles, brings information to the manager, and it is
this information (together with the status) that enables him to perform the decision making role
effectively. Interpersonal roles involve interactions with people. Informational roles are concerned
with collection, dissemination and use of information for the purpose of communication. Decisional
roles involve taking decisions about various issues in the organization.
A brief description of the ten roles is given below :

1. Figurehead-In this role a manager performs symbolic duties required by the status of his office.
Making speeches, bestowing honours, welcoming official visitors, distributing gifts to retiring
employees are examples of such ceremonial and social duties.

2. Leader-This role defines the managers relationship with his own subordinates. The manager
sets an example, legitimizes the power of subordinates and brings their needs in accord with
those of his organization.

3. Liaison-It describes a managers relationships with the outsiders. A manager maintains mutually
beneficial relations with other organizations, governments, industry groups, etc.

4. Monitor-It implies seeking and receiving information about his organization and external events.
An example is picking up a rumour about his organization.

5. Disseminator-It involves transmitting information and judgements to the members of the

organization. The information relates to internal operations and the external environment. A
manager calling a staff meeting after a business trip is an example of such a role.

6. Spokesman-In this role, a manager speaks for his organization. He lobbies and defends his
enterprise. A manager addressing the trade union is an example.

7. Entrepreneur-It involves initiating change or acting as a change agent. For example, a manager
decides to launch a feasibility study for setting up a new plant.

8. Disturbance handler-This refers to taking charge when the organization faces a problem or
crisis, e.g., a strike, feud between subordinates, loss of an important customer. A manager
handles conflicts, complaints and competitive actions.

9. Resource allocator-In this role a manager approves budgets and schedules, sets priorities and
distributes resources.

10. Negotiator-As a negotiator, a manager bargains with suppliers, dealers, trade union, agents, etc.

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 Figurehead

INTERPERSONAL ROLES Leader

Liaison
Monitor
INFORMATIONAL ROLES Disseminator

Spokesman

Entrepreneur
Disturbance handler
DECISIONAL ROLES
Resource allocator
Negotiator
Generally, interpersonal roles are more prominent at the top level of management. At middle
management levels, informational roles are more common. Decisional roles are significant normally
at top and lower levels of management.

20. Responsibilities of a manager

A manager has to do several things if he is to fulfil his responsibility for the efforts of his
subordinates.

a) Basically, he has to create a conductive atmosphere within his unit to enable his subordinates to
develop, sharpen and utilize their abilities and skills in a most effective manner.

b) As a responsible and mature manager, he has to positively and purposefully understand the
essential nature and dynamics of tasks and the various forces which exert their influence on
them.

c) He has to be aware of the needs, goals, values and attitudes of his subordinates as they interact
with each other within and outside the work unit.

d) He has to devise the ways and means of relating the needs of his subordinates with the goals of
his work unit.

e) He has to provide effective and supportive leadership, foster team spirit, activate bilateral and
multilateral communication channels with them, enlist their participation in decision making and
implementation, extend reasonable freedom to them for operational purposes, remove obstacles

30
 and distortions, provide feedback to them on how they perform and help them to overcome their
deficiencies.

f) He has to pave the way for generation of interpersonal trust and goodwill.

g) A responsible manager focuses and builds on the strengths of his subordinates and makes them
as productive as possible.

21. Functions of a manager

All the managers have to perform certain functions in an organization to get the things moving.
Various authors have defined these functions in separate manners.

Henry Fayol has classified functions into:

1. Planning,

2. Organizing,

3. Commanding,

4. Coordinating and

5. Controlling.

Luther Gullick has used his POSDCORB (Planning, Organizing, Staffing, Directing, Controlling,
Reporting and Budgeting) approach to explain the same in a more comprehensive manner.
In any organization, the managers have to perform certain functions in order to achieve the
organizations goals and objectives. The managerial functions can be grouped as below:

Functions
Include- Operative functions

Planning Forecasting, decision making, programming, Production

policy formulation, budgeting etc.

Organizing Functionalisation, delegation, decentralization Marketing

and departmentalization etc.

Staffing Recruitment, selection, training, man power Purchasing

forecasting, compensation planning, promotion
etc.

Directing Supervision, communication, leadership, Financing

motivation etc.

Controlling Making standards, reporting, recording Personnel

measurement and corrective action

31
 The contribution of each of the above functions does not remain the same across all levels of
management. The following diagram shows how the functions vary across organizational levels:

22. Effective communication

Top Plannin
Management g Organizin
g
Middle Staffing
Management Directing
Controllin
g
Supervisory
Management
Effective communication refers to communication which achieves the goals set for it in an efficient
manner. An effective communication system is one that ensures that a common understanding is
produced and promoted between the sender and receiver of a message as to its meaning and
implications.
Bringing about effective communication is a complex process and it involves the use of several
factors. These include the following:

Attitudes of managers not only towards lower staff but also towards each other,
Level of understanding among people,
Nature of authority structure,
Extent and efficiency of physical facilities for communication,
Nature of information which is the subject matter of communication,
The wording and language employed to communicate.
Principles of an effective communication system are:

a. The sender should be clear in his mind as to the intent, content and context of communication on
each occasion. He should also clarify the purpose of communication to the receiver, apart from
giving due attention to the aspects of timing of communication.
b. Adequate safeguards are to be built into the communication system to prevent transmission of
conflicting and confusing messages to receivers. Information should be reliable.
c. The communication channels should be straight forward and short, to minimize delays and
distortion of information.
d. Arrangements are to be made for prompt transmission of information to the needed areas. Fast
and automatic systems of information flow should be built into the organizational structure.
e. Communication effectiveness can be maintained and improved by matching the media with the
nature of messages to be transmitted. Medium may be formal or informal, oral or written, face to
face or indirect, or an appropriate combination of them.

32
 f. There should be a proper internal organizational atmosphere of trust, goodwill, understanding in
the organization.
g. Language employed in communication should be simple and easy to understand
h. Feedback is the most important characteristic of effective communication.
i. The system should allow free flow of information from the points of origin to destination.
j. Formal communication channels should be supplemented with informal channels.
k. Upward communication should be encouraged in an atmosphere of openness and freedom from
fear.
l. Communication system should be flexible enough to absorb additional loads of information.

23. Types of communication

Upward Communication
Formal Communication

Types of Communication
-- According to the organizational structure Downward Communication
Informal Communication

Vertical Communication
-- According to Direction of Communication Diagonal
Communication
Horizontal Communication

Oral Communication
--According to way of Expression
Gestural
Communication
Formal Communication:
Written Communication
The salient features of Formal communication are-

(a) Formal channels are the channels designed by management to link various parts of
the organization.

(b) In a formal communication system, matters such as who should communicate with
whom, what, when and how to communicate are more explicitly defined.

(c) Formal channels are designed as part of organizational structure of authority and
activity relationships.

(d) Formal communication follows the routes formally laid down in the organization
structure of the enterprise.

33
 (e) Formal communication is generally in writing.
Formal channels basically consists of Downward, Upward, Horizontal and Diagonal information
flows
The following are the advantages of Formal communication-

Useful for decision-making

Planning
Co-ordination
Control over subordinates
Fixation of responsibility
Enable managers to perform their functions
The following are the disadvantages of Formal communication-

Increases the workload

Reduces accuracy of messages
Not good for upward communication
Adversely effects the relationship of topmost superiors and distant subordinates
They tend to be slow and rigid.
Organizational distance, screening at various points and narrow route .
Informal Communication (Grapevine)
Salient Features:

(i) These channels naturally and normally emerge in organizations over a period
of time.
(ii) They arise out of activities, interactions and sentiments of people in
organizations.
(iii) Members in an organization establish social relations with each other which
go beyond official, formal relations.
(iv) Such channels are established by people for purposes of exchange of ideas,
feelings and information within and outside the organization.
(v) Members of an informal group pass on information and opinions to each
other as well as to other informal groups.
(vi) A grapevine is structure less and information passes through it in all
directions.
(vii) It is a natural and normal activity due to desire of people to talk to one
another.
(viii) Only a few persons are active communicators in it. These can be called
liaison individuals. People are active on the grapevine when their own interests and
interests of their friends/colleagues are involved.

34
 (ix) Grapevine functions partly in a predictable manner which offers managers a
chance to influence it.
Advantages

(i) Members of the organization to transmit information both on task use

informal channels and non-task related matters.
(ii) Communication is transmitted at greater speed because it functions through
word of mouth or observation.
(iii) It has greater flexibility.
(iv) It is more dynamic and free from status differentials.
(v) It helps in developing better human relations in the organization.
(vi) It serves to fill possible gaps in the formal communication due to its flexible
and personal nature.
(vii) It helps to link persons who are not in the official chain of command.
(viii) Grapevine helps to satisfy social needs of employees and provides an outlet
for releasing anxiety, frustration, etc.
Disadvantages

(i) Encourage rumors that may distort information.

(ii) It becomes difficult to assign responsibility for such erratic information.

(iii) Is less orderly and less static.

(iv) As grapevine has no definite origin, nobody can be held responsible for it.

(v) It may result in leakage of confidential information.

(vi) It is not dependable as informal channels may not always be active.

Downward Communication

Salient Features

(i) Employed by managers of various levels to transmit information, ideas and

queries.
(ii) Follows the line of authority or the chain of command.
(iii) Can be both directive and non-directive in nature.
(iv) Flow of information from a superior (high level) to a subordinate (lower
level)
Advantages

(i) Used for passing on managerial decisions, plans, policies to subordinates.

(ii) Aids in defining and clarifying goals.
(iii) Used for guiding, instructing and inspiring subordinates.
(iv) Information about the objectives, policies and programmes of the enterprise.

35
 (v) Provision of such information to employees helps to create a sense of
belonging, feeling of loyalty to the organization and an active interest in the work.
Disadvantages

(i) Communication is taken as a directive as it is coming from the top.

(ii) It may hamper feedback to the management .

Upward communication
Salient Features

(i) Employed by subordinates to transmit information.

(ii) These channels follow the line of authority.
(iii) Communication is partly task oriented and partly interpersonal.
(iv) It is non directive.
(v) Flow of communication from lower levels (subordinates) to higher levels
(superiors) of authority.
(vi) A Manager cannot exercise effective control without such information .
Upward communication performs the following important functions-

a. Serves as a measurement of effectiveness of downward communication.

b. Provides management with necessary information for decision making.
c. Relieves employees from pressures and frustrations of work situations.
d. Gives the employees a sense of participation in management.
Advantages

(i) Ideas and requests relating to job roles can be transmitted from subordinates
to superiors.
(ii) Consist of performance reports, replies to queries etc.
(iii) Used to transmit views, suggestions and grievances.
(iv) Enables the management to know what is happening throughout the
organization.
(v) An executive can know the outcome of his decisions and instructions from
reliable information from the employees.
Disadvantages

(i) Subordinates may filter information to protect their own interests.

(ii) May not be taken seriously by top management.
Horizontal Communication (or lateral communication)
Salient Features-

(i) Exchange of ideas and information among people working at the same level
of authority.

36
 (ii) Co-ordination of the activities of different departments or divisions of the
enterprise.
(iii) Communication among people of the same status or rank.
(iv) Takes place mostly through meetings, conferences, telephones, letters,
memos, manuals, etc.
Advantages-

(i) Communication among people of same status or rank tends to be faster and
flexible.
(ii) There are no status barriers.
(iii) Helpful in coordinating the activities of different departments or division of
the enterprise.
(iv) Enables executives to exchange information and understanding.
Crosswise or Diagonal Communication
Salient Features-

(i) Communication between persons who are neither in the same department nor
on the same level of organizational structure.
(ii) It cuts across departmental lines.
(iii) Diagonal communication is the least used channels of communication.
(iv) Generally takes place when members cannot communicate effectively
through other channels.
Example: The Cost and Works accountant who is interested in conducting a distribution cost analysis
may ask a report directly from the sales representatives. A diagonal communication takes place when
sale representatives submit their report directly to the Cost and Works Accountant.
Advantages-

(i) Helps to save time

(ii) Assists in speeding up action.
(iii) Helps communication between persons who are neither in the same
department nor on the same level of organizational structure.
(iv) It cuts across departmental lines.
Disadvantages-

(i) Least used channel of communication.

(ii) Generally takes place when members cannot communicate effectively

through other channels.
Oral Communication
Salient Features:
(i) Involves exchange of messages through spoken words.
(ii) May take place a. by face to face contacts
(iii) b through mechanical devices like telephone

37
 (iv) It is very speedy, helps to interchange feelings and attitudes.
(v) Greater understanding and cooperation can be obtained.
Merits
(i) Economical
(ii) Personal touch
(iii) Speed
(iv) Flexibility
(v) Quick response

38
Demerits
(i) Lack of record
(ii) Time consuming
(iii) Lengthy message
(iv) Physical distance
(v) Misunderstanding

Written Communication
Salient Features
(i) Transmission through written words- letters, circulars, memos
(ii) Used to issue specific orders and instructions to subordinates
(iii) Managers frequently use written communication in the course of performing
their functions.
(iv) It is frequently used to issue specific orders and instructions to subordinates.
Merits:
(i) Effectiveness
(ii) Lengthy messages
(iii) Economical
(iv) Repetition
(v) Permanent record
(vi) Better response
Demerits:
(i) Time consuming
(ii) Expensive
(iii) Inflexibility
(iv) Little secrecy
(v) Lack of personal touch
(vi) Misunderstanding

39
Gestural Communication or Body Language
Salient Features
(i) Communication is through gestures or postures.
(ii) A person can convey much through wave of hands, parting of lips,
movement of eyes, etc.
(iii) Gestures by the audience indicate reaction or response to the oral message.
Advantages-
(i) Gestural communication is very useful in conveying feelings, emotions and
attitudes.
(ii) It is often used to supplement oral communication.

Orders
Instructions
Policies
Memos
Circulars
Procedures
Rules
Budgets Requests
Handbooks
Newsletters Suggestions
Grievances
Complaints
Proposals
Reports
Upward communication
Downward communication

Inter departmental memos

Inter personal dialogues
Line and staff parleys
Telephonic conversations
Union Management meetings

Horizontal communication

40
Fig. Communication Flows
24. Role of listening in effective communication

Careful listening is essential for effective communication. The communicator should try to secure the
individual attention of the communicatee. He should convey the message in such a way that the
emotions and sentiments of the receiver are not hurt. Empathetic listening and open mind are
necessary for this purpose.
One of the steps which can be taken to overcome the barriers to communication is Attention. To
listen carefully is considered as a commandment of good communication.
Communication is a two-way process. There should be follow-up action to ensure that the message is
rightly understood. For example, nodding of head may indicate that the message has been
understood.
Listening means giving attention, not merely being an audience. Another synonym of listening is
lending ones ear. Thus conscious participation is a prerequisite. Listening is not merely an activation
of the sensory organ but also the involvement of the mind. It involves active participation of the
listener. He has to pay attention and interpret what is being said.
The failure to listen is another communication barrier. Often, when the other person is expressing his
or her point of view, the receiver stops listening in order to concentrate on preparing his or her
rebuttal argument. Other times, the receiver falls to listen due to distractions, such as the heat or the
discomfort of the setting. Sometimes, the receiver fails to listen simply due to a lack of concentration,
which may be exacerbated by boredom or fatigue. Most people have a limited span of attention when
it comes to listening. After listening to someone speak for a time, the receiver often tunes him or her
out - although still listening, they simply do not consciously register the full content of the sender's
message.
Conclusion: Listen carefully-find areas of common interest and listen for main ideas.

25. Barriers to effective communication

Inspite of the development of high speed electronic devices, communications are not successful in
many cases. Some of the barriers or obstacles to effective communication are discussed below:

1. Organizational Barrier-
The organization structure with a scalar chain of command restricts free and frequent
communications. Due to the intervention of many levels delay and distortion in the
message occurs. Successive transmission of the same message are decreasingly accurate.
Formal and structured organization pattern discourages informal communications. It
reduces chances of cross checking. A manager receives information from one source and
transmits messages to another single level. The more complex the organization, the more
difficult it becomes to ensure that correct information is passed on to the right person at
the right time through the right medium.

41
2. Status Barrier-
Persons of higher status do not talk freely with those of lower status. Subordinates at lower
levels do not feel comfortable in talking to superiors. They hold back unpleasant facts.
Lack of trust in his superior makes communication less effective.

3. Perceptual Barrier-
People greatly differ in the way they perceive things and events. People are likely to
analyze and interpret information in terms of stereo-types they have built up in the past.

4. Narrow/Closed minds-
If people limit their opinion to their own narrow goals and views, no effective
communication is possible because closed minds consider all information as unnecessary
overload.

5. Differential assumptions-
The information contained in communication is generally backed up by certain
assumptions. The sender may have been quite clear about the assumptions but unless they
are shared with the receiver, there is likely to be incomplete communication, leading to
different interpretations.

6. Semantic Barrier-
Words and symbols used to communicate facts may mean different things to different
people. For Example: Profits may mean one thing to a manager and quite another to a
worker.

7. Personal weaknesses-
Fear and distrust may prevent effective communication. The sender may fear that the
consequences of transmitting a particular message may destabilize his own position or the
position of the receiver even though it is in the larger interests of the system to
communicate. People who receive from and transmit information to them seldom attach
much importance to the content. Anger, Jealousy, hatred interferes with the
communication process.

8. Resistance to communicate-
Resistance to communicate is a pervasive barrier to communication. Some people think
wrongly that information need not be or should not be communicated and that people
already know about it.

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9. Inattention Barrier-
When the receiver does not pay complete attention to the message, communication
becomes ineffective. A person may be inattentive when he considers the message as
superficial or uninteresting. He may be pre-occupied with other more important matters or
the message may be contrary to his expectations. Extreme emotions, e.g., depression may
also cause lack of attention.

10. Information Overload-

Managers are flooded with information from various sources. They may not always be
able to regulate the flow of information. They may ignore or misinterpret some of the
messages. Time pressures may also create communication problems.

11. Premature Evaluation-

Communication is hampered when the receiver evaluates the message before getting the
complete information.

12. Channel Distortions-

Physical or mechanical barriers may also cause distortion of communication. Many people
talking simultaneously, electronic disturbances, inaudible telephone lines, noise, etc. are
examples of channel distortion.
Summary-
BARRIERS TO COMMUNICATION

1. Absence of a common frame of reference.

2. Badly encoded messages.

3. Disturbance in the transmission channel.

4. Poor retention (especially in face to face communication)

5. Inattention by the receiver

6. Unclarified assumptions

7. Mistrust between the sender and the receiver

8. Premature evaluation of the message

9. Different perception of reality

10. Semantic difficulties

11. Vagueness about the objectives to be achieved

12. Misinterpretation of the message

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 13. Clash of attitudinal nuances of the sender and the receiver

14. Psycho-physical factors

15. Selection of a wrong variety of language

26. Barriers to effective listening

Barriers to effective listening are:

(i) Your actual physical ability to hear?

(ii) Attention to the speakers voice, appearance, pronunciation, accent. Use grammar, or
mannerisms-to the exclusion of what the speaker is trying to say to you?

(iii) Discounting and disregarding what the speaker is saying because you do not like his or her
physical appearance, voice, pronunciation, accent, use of grammar, or mannerisms?

(iv) Listening to words only, not to the underlying feeling behind the words, much of which is
communicated by nonverbal methods.

(v) Listening for details to the exclusion of the overall meaning, or to the exclusion of the ideas
and principles on which the details are based?

(vi) Allowing preconceived beliefs about the particular subject being discussed to prevent you
from receiving the speakers ideas?

(vii) Allowing emotional feelings about the subject to turn you off, especially if the speaker
uses emotional words?

(viii) Concentrating on note taking to the extent that you lost the train of thought?

(ix) Interrupting?

(x) Being sure that you already know all there is to know about the subject?

(xi) Inattention because you do not like to consider unpleasant complicated, or difficult subjects?

(xii) Inattention because you are tired, sleepy, hungry, and want to go home?

(xiii) Inattention because you know that whatever is said, you could say it better?

(xiv) Inattention because you have more important things to think about?

(xv) Boredom because you have already heard too many speeches, lectures, discussions,
conversations, and people talking at you?

(xvi) Inability to keep your mind on the subject(s)?

44
 (xvii) Inattention to the speakers words because you are trying to think of a reply, or of a question
to ask during the discussion period?

(xviii) Confusion because you dont have the faintest idea of what the speaker is talking about and
have never heard the words before?

(xix) Lack of understanding because you do not look at the speaker to grasp the full effect of what
is being said, as well as to notice gestures, facial expressions, and other nonverbal signals?

(xx) Lack of concentration because your mind moves faster than the speakers voice and wanders
into side paths so that you lose the train of thought?

27. Motivation

Motivation is the process of activating a dynamic but dormant force within a person which
keeps on crumbling under him to perform better and better.
The term motivation has been derived from the word motive. Motive is a psychological force within
an individual that sets him in motion.
According to E.F.L.Brech,
Motivation is a general inspirational process which gets the members of the team to pull their weight
effectively, to give their loyalty to the group, to carry out properly the tasks that they accepted and
generally to play an effective part in the job that the group has undertaken.
Motivation is the process of steering a persons inner drives and actions towards certain goals and
committing his energies to achieve these goals. It involves a chain reaction starting with felt needs,
resulting in motives which give rise to tension(unfulfilled desires) which causes action towards goals.
It is the process of stimulating people to strive willingly towards the achievement of organizational
goals.
Motivation may be defined as the work a manager performs in order to induce subordinates to act in
the desired manner by satisfying their needs and desires. Thus, motivation is concerned with how
behaviour gets started, is energized, sustained and directed.
The above definitions reveal the following characteristics of motivation:

(i) Motivation is a personal and internal feeling

(ii) Motivation produces goal-directed behavior

(iii) Motivation is a continuous process

(iv) Motivation is complex

(v) Motivation is system-oriented

(vi) A person cannot be partly motivated, as he is a self-contained and

inseparable unit. Motivation creates goal directed behavior.

(vii) Motivation can be either positive or negative.

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 (viii) Motivation is different from job satisfaction

Needs Tension Incentives

(Actions)

Change Fail Succeed

Repeat Motivation
Fig. Motivation Process

Thus, needs and incentives are the key elements in the process of motivation.
Significance of Motivation

(i) Higher efficiency

(ii) Low absenteeism and turnover
(iii) Facilitates change
(iv) Human relations
(v) Corporate image
Motivation helps to utilize and develop creative talent of employees.
In the words of Rensis Likert,
Motivation is the core of management
Poorly motivated employees can nullify the soundest organization. Thus, motivation is the key to
management in action.

28. Maslows Need Hierarchy Theory

MASLOWS NEED HIERARCHY THEORY

Abraham H. Maslow, an eminent American psychologist, developed a general theory of motivation,
known as the Need hierarchy theory. The salient features of this theory are as follows:

(i) The urge to fulfil needs is a prime factor in motivation of people at work. Human beings
strive to fulfil a wide range of needs. Human needs are multiple, complex and interrelated.

(ii) Human needs form a particular structure or hierarchy. Physiological needs are at the base of
the hierarchy while self-actualization needs are at the apex. Safety (security) needs, social
needs and esteem (ego) needs are positioned in between. As one proceeds from base towards
apex, needs become less essential.

46
(iii) Lower-level needs must at least partially be satisfied before higher level needs emerge.
Human beings strive to gratify their needs in a sequential manner starting from the base of
the hierarchy. All needs are not felt at the same time.

(iv) As soon as one need is satisfied, another need emerges.

(v) A satisfied need is not a motivator, i.e., it ceases to influence human behaviour.

(vi) Various need levels are interdependent and overlapping. Each higher level need emerges
before the lower need is completely satisfied.
As shown in the following figure there are five categories of human needs:

Self
actualization
needs

Esteem needs

Social needs

Safety needs
Physiological
needs

Fig. Maslows Need Hierarchy

(i) Physiological needs - These are biological needs required to preserve human
life. Therefore, these needs are also known as survival needs. They include needs for
food, drink, clothing, sleep, etc. These needs must be satisfied first of all and
therefore they are a powerful motivating force when thwarted. Physiological needs
must be satisfied repeatedly but they are essentially finite. For example, an individual
requires a limited amount of food but he requires it every day.

(ii) Safety Needs - Once physiological needs are reasonably satisfied, a person
wants protection from physical dangers and economic security. Safety needs are thus
concerned with protection from danger, deprivation and threat. These needs are finite
but they may serve as motivators in case of arbitrary and unpredictable management
action.

(iii) Social Needs - Man is a social animal as he seeks affiliation with others.
Social needs refer to need for belonging, need for acceptance, need for love and
affection, etc. Such needs are infinite as they are considered as secondary needs
because they are not essential to preserve human life. Organizations can influence
these needs through supervision, communication system, work groups, etc.

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 (iv) Esteem Needs - Esteem needs are of two types: self-esteem and esteem of
others. Self-esteem needs include self-respect, self-confidence, competence,
achievement, knowledge and independence. Esteem of others includes reputation,
status, and recognition. These needs are infinite and thwarting them results in feeling
of inferiority, weakness and helplessness.

(v) Self-actualization Needs: These are the needs for realizing ones full
potential, for continued self-development, for being creative. It is the desire of
becoming what one is capable of becoming. It is an infinite and growth need.
Need hierarchy represents a typical pattern that operates most of the time.
Critical Appraisal
The theory is widely criticized for the following reasons:

a) Needs are not the only determinant of behaviour.

b) The theory gives an oversimplification of human needs and motivation.
c) The hierarchy of needs is not always fixed.
d) Maslows theory is based on a relatively small sample.
e) There is no definite evidence that once a need is satisfied it loses its motivating force.

29. Herzbergs Hygiene Factors

Herzbergs Two-Factor Theory

Herzberg theory of motivation is an extension of theory suggested by Maslow and classifies
motivation factors into two categories:

a) Hygiene or maintenance factors

b) Motivating factors
Hygiene or maintenance factors
They are necessary to maintain a reasonable level of satisfaction among employees. These factors do
not provide satisfaction to the employees but their absence will dissatisfy them. Therefore, these
factors are called dissatisfiers. These are not intrinsic parts of a job but they are related to conditions
under which a job is performed. They are environmental factors and extrinsic to the job.
They include:

Company Policy and Administration

Technical Supervision
Inter-personal relationship with peers, supervisors and subordinates
Working conditions
Salary
Status

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 Job Security
On the other hand, motivational factors are intrinsic parts of the job. Any increase in these factors
will satisfy the employees and help to improve performance. But a decrease in these factors will not
cause dissatisfaction. These include Achievement, Recognition, Advancement, Responsibility, and
Opportunity for growth
Critical Appraisal
Herzbergs theory has been criticized on the following grounds:

a) The theory is based on a small sample of 200 accountants and engineers which is not
representative of the work force in general.

b) The theory focuses too much attention on satisfaction rather than on performance
level.

c) The distinction between maintenance factors and motivating factors is not fixed.

30. Managerial Grid

The managerial grid is a two-dimensional portrayal of leadership based on concerns for people and
for production.
It was developed by Blake and Mouton and has nine possible positions on the grid.
The five key positions identified by Blake and Mouton were as follows:
a. 1,1 Impoverished
b. 9,1 Task
c. 1,9 Country-club
d. 5,5 Middle-of-the-road
e. 9,9 Team
Blake and Mouton concluded that managers perform best using a 9,9 style.

49
The Grid provides a visual framework for understanding various approaches to leadership, with axes
of Concern for Production and Concern for People, measured on a scale from 1 (low) to 9 (high). The
grid presents a conceptual frame of reference for guiding the organization development process
through various states -- teams building, interface conflict solving, ideal strategic corporate modeling,
tactical implementation of the model, and stabilization. The process focuses on individual
development, team building, conflict solving and strategic modeling. This widely-known Grid
concept focuses on five fundamental styles:

0 9

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 9,9: Contribute and Commit.
Work accomplishment is from committed people, interdependence through a common stake in
organization purpose leads to relationships of trust and respect (style is Sound).
9,1: Control and Dominate.
Operational efficiency results from arranging working conditions so that human elements interface
only minimally (style is Dictatorial).
1,9: Yield and Comply.
Thoughtful attention to people's need for satisfying relationships leads to a comfortable, friendly
organization atmosphere and work tempo (style is Accommodating).
5,5: Balance and Compromise.
Adequate organization performance is possible by balancing the necessity to get out work with
maintaining a satisfactory level of morale (style is Status Quo).
1,1: Evade and Elude.
Exertion of minimal effort to get required work done is appropriate to sustaining organizational
membership (style is Indifferent

31. Authority

Authority may be defined as the right to guide and direct the actions of others and to secure from
them responses which are appropriate to the attainment of the goals of the organization.
According to Barnard, Authority is the character of communication(order) in a formal organization
by virtue of which it is accepted by a contributor to, or member of the organization as generating the
action he contributes, that is, as governing or determining what he does or is not to do so far as the
organization is concerned.
The main characteristics of authority are as follows:

(i) The authority given to a position is legal and legitimate.

(ii) The extent and limits of authority of a position are defined in advance.

(iii) Authority is a relationship between two individuals-one superior and the

other subordinate.

(iv) Authority is used to achieve organizational goals.

(v) Authority is the key to the managerial job.

(vi) Authority can be delegated.

(vii) Authority in itself is an objective thing but its existence is always subjective.

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32. Power

Power refers to the ability or capacity to influence the behaviour or attitudes of other
individuals. A managers power may be considered as his ability to cause subordinates to do what
the manager wishes them to do.
A managers power may be measured in terms of his ability to

a) give rewards,
b) punish individuals,
c) withdraw rewards, etc.
Thus, reward, coercion, dominating personality, expertise, etc. are the main sources of power.
Power is an important means to enforce obedience to the rules, regulations and decisions of the
organization. Power may be derived on personal or institutional bases. The use of power may affect
the behavior of people in the desired manner. But it does not necessarily imply that the people are in
agreement with the exercise of power.

33. Difference between Authority and Power

Though the concepts of Authority and Power are related to each other, there are some differences
between them which are outlined as follows:

Ability vs Right :
Power is a generalized ability endowed in an individual to influence the actions of others. Authority
is vested in formal managerial or administrative positions. It gives the position holder the right to
influence behavior and to demand compliance. Legitimate formal position is only one of the bases of
power. Thus authority is a form of power. Power is a broader concept than authority.

Formal-non-formal:
Authority is generally associated with formal organizations. But the other bases of power operate and
become effective in non-formal situations also. Authority has rational legal implications while power
may or may not have such implications.

Personal-impersonal:
Authority is impersonally vested in job positions. But the other bases of power, as for example,
charisma, knowledge, and reference have personalized bases and need not flow from the position
held by the individual power holder concerned. This means that authority can be delegated. But
power based on other sources-for example, experience cannot be delegated.

Degree of structure:
Authority is more structured in organizations and governed by several due forces, procedures and
constraints. It flows downwards and can be exercised in a well defined, functional manner only. On
the other hand, some forms of power are less structured. They are more flexible and open. They flow

52
 not only downwards, but also upwards and sideways as for example, the power of subordinates to
withhold co-operation to their superior. In power relationships based on sources other than authority,
there are no fixed superiors and subordinates.

Association with responsibility:

Authority and responsibility go together while in the case of other forms of power, a sense of
responsibility may or may not co-exist with them. For example, an individual may make use of his
expertise in making bombs and explosives, to terrorize people. It amounts to exercise of expert power
without responsibility.

Nature of compliance:
Compliance to authority attempts or to the exercise of authority by a manager in organizational
situations and on task related matters, is mandatory on the part of subordinates and is not left to their
free will. Defiance of authority by subordinates is normally regarded as insubordination and is liable
to be viewed seriously. But in the case of some other bases of power, compliance is not mandatory.
For example, one may disregard the expert opinions of a group or individual and get away with it.

34. Leadership styles

Leadership Styles
The behaviour pattern exhibited by a leader while influencing the followers is known as leadership
style. On the basis of how leaders use their power, leadership styles can be classified into three broad
categories-autocratic, consultative and free-rein.

Autocratic or Authoritarian Leadership

Salient Features:

(a) An autocratic leader exercises complete control over the subordinates.

(b) He centralizes power in himself and takes all decisions without consulting the subordinates.

(c) He dominates and drives his group through coercion and command.

(d) He loves power and never delegates authority.

(e) The leader gives orders and expects the subordinates to follow them ungrudgingly and
unquestioningly.

(f) He uses rewards and holds threat of penalties to direct the subordinates.
Advantages:

a. Autocratic leadership style permits quick decision-making.

b. It provides strong motivation and satisfaction to the leader
c. Less competent subordinates are needed at lower levels
d. The style may give positive results when higher speed is required
Disadvantages

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a. Autocratic style leads to frustration, low morale and conflict amongst subordinates
b. Subordinates tend to avoid responsibility and initiative
c. Full potential and creative ideas of subordinates are not utilized
d. Organizational continuity is threatened in absence of the leader

Democratic or Participative Leadership

Salient features

a. Consultative or democratic leader takes decisions in consultation with the subordinates

b. Decentralizes authority and allows subordinates to share his power
c. Does what the group wants and follows the majority opinion
d. Provides freedom of thinking and expression
e. Listens to suggestions, grievances and opinions of the subordinates
Advantages

a. Improves job satisfaction and morale of subordinates

b. Cultivates decision making ability of subordinates
c. Leader multiplies his abilities through the contribution of his followers
d. Quality of decisions is improved
e. Develops positive attitudes
f. Labor absenteeism and turnover are reduced.
Disadvantages:

a. Time consuming
b. May result in delays in decision making
c. May not yield positive results when subordinates prefer minimum interaction with the leader.
d. Over a period of time subordinates may develop the habit of expecting to be consulted.
e. Consultation may be interpreted as a sign of incompetence on the part of the leader to deal with
problems.
f. It requires considerable communicating and peruasive skills on the part of the leader.

54
 L L
L

Autocratic Democratic Laissez Faire

Leadership Styles
Free-rein or Laissez-faire leadership
Salient Features:

1. Involves complete delegation of authority so that subordinates themselves take decisions.

2. The free-rein leader avoids power and relinquishes the leadership position.
3. The free-rein leader serves only as a contact to bring the information and resources needed by
the subordinates.
Advantages:

1. Positive effect on job satisfaction and morale of subordinates.

2. Maximum possible scope for development of subordinates.
3. Full utilization of the potential of subordinates.
Disadvantages:

1. Subordinates do not get the guidance and support of the leader.

2. It ignores the leaders contribution just as autocratic style ignores the contribution of the
subordinates.
3. Subordinates may move in different directions and may work at cross purposes which may
degenerate into chaos.
On the basis of how leaders use their motivation, leadership styles can be classified into two broad
categories-Positive and Negative Leadership

Positive approach of leadership:

Salient Features-

55
 (i) Leader motivates people by offering them rewards, monetary or otherwise, for better
performance.
(ii) It assumes that rewards induce people to work hard.
(iii) The more the reward, the higher is the efficiency.
(iv) Positive leadership promotes peace.
For Example: Introduction of a scheme of leave encashment will certainly reduce the rate of
absenteeism in the organization.
Negative approach of leadership:
Salient Features-

(i) Leader (manager) induces people to work hard by threatening them to penalize if work is not
up to the mark
(ii) The main emphasis is mainly on penalties for the shortcomings.
(iii) Expects acceptable performance in many situations but it costs high to the organization.
(iv) Subordinates work not only to contribute something to the organization but only to protect
their jobs.
(v) There is no incentive for the subordinates, if they work beyond a certain level.
For Example: If the manager imposes a salary cut for absence from duty, it is the negative approach
to improve absenteeism.
Orientation Styles
Under this category, there are two types of styles
(i) Employee-oriented leadership:
Salient Features-

1. More concern about their subordinates

2. Provision for better working conditions
3. Needs of subordinates are satisfied
4. Highest attention is paid to the interests, attitudes and needs of subordinates
(ii) Production or task-oriented leadership:
Salient Features-

1. Main concern is only to get the work done

2. Subordinates are kept busy all the time
3. Human aspect of the subordinates are ignored
4. Leaders are of the opinion that they can attain results by better planning, engaging better methods
and machines and keeping the employees busy all the time.

35. Synergy

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 SYNERGY, simply stated, is the concept that the combined effect of certain parts is greater than the
sum of their individual effects.
For Example: Product 1 contributes X and product 2 contributes Y. If they are produced together,
they may contribute X+Y+Z. Z is the synergistic effect of X and Y being brought together and that Z
represent positive synergy. There can be negative synergy as well. The study of synergy helps in
analyzing new growth opportunities.
The concept of synergy can be used to motivate members of an organization to work efficiently and
effectively towards the attainment of organizational objectives. If synergy is the mission of the
organization, team building is a means to achieve the end.

36. Group
Man is a social animal and prefers to live and work in groups.
A GROUP is an aggregate of persons with close inter relationships. A group is a cluster of two or
more individuals who interact with each other on a relatively enduring basis, identify themselves as
belonging to a distinct unit and who share certain common activities, interest, values and goals.
Members of a group relate to one another in some common ways and united by some common ties on
a sustained basis. A group is different from a crowd which has no structure and performs no specific
function. The members of a group interact with one another to jointly pursue common goals. An
organization consists of several types of groups. Every member of the organization belongs to one or
more groups.
TYPES OF GROUPS:

Primary and Secondary Groups

Small and Large Groups

Formal and Informal Groups

37. Team
Work teams are formal groups made up of interdependent individuals, responsible for attaining goals.
Organizations are increasingly designing work around teams rather than individuals.
A work team is a formal group made up of interdependent
individuals, responsible for attaining a goal . All work teams are
groups, but only formal groups can be work teams.
There are different types of teams. Four characteristics can be used to distinguish different types of
teams:
1. Teams can vary in their purpose or goal.

2. The duration of a team tends to be either permanent or temporary.

3. Team membership can be either functional or cross-functional.

4. Finally, teams can either be supervised or self-managed.

Given these four characteristics, some of the most popular types of teams used today include:
functional teams, self-directed or self-managed teams, and cross-functional teams.

57
 There are a number of reasons why a team will be used.

Creates esprit de corps.

Allows management to think strategically.
Speeds decisions.
Facilitates workforce diversity.
Increases performance.
DEVELOPING AND MANAGING EFFECTIVE TEAMS.
Teams aren't automatically going to magically increase productivity. We need to look more closely at
how managers can develop and manage effective teams.
Characteristics of effective teams. There are eight characteristics associated with effective teams.

a) Clear goals.
b) Relevant skills.
c) Mutual trust.
d) Unified commitment.
e) Good communication.
f) Negotiating skills.
g) Appropriate leadership.
h) Internal and external support.
Managing teams:

In planning, it's important that teams have clear goals and that these goals be clear to every
member of the team.

Organizing tasks involved with managing a team include clarification of authority and structural
issues.

Leading issues include such things as determining what role the leader will play, how conflict
will be handled, and what the best communication process is.

Two important controlling issues include how to evaluate the team's performance and how to
reward team members. One popular approach to group incentive plans is gain sharing which is a
program that shares the gains of the efforts of group members with those group members.

38. Group and Team

There is a difference between a Group and Team:

1. A Group may be formal or informal where as a team is necessarily formal.

58
 2. A group may or may not have a common goal to work towards but a team efforts are
clustered towards the attainment of organizational objectives.

3. A group can be organizational or social. A team is mostly organizational.

A Group is an aggregate of persons with close inter relationships. A group is a cluster of two or more
individuals who interact with each other on a relatively enduring basis, identify themselves as
belonging to a distinct unit and who share certain common activities, interest, values and goals.
Members of a group relate to one another in some common ways and united by some common ties on
a sustained basis. A group is different from a crowd which has no structure and performs no specific
function. The members of a group interact with one another to jointly pursue common goals. An
organization consists of several types of groups. Every member of the organization belongs to one or
more groups.
If a product or technological break through generates a family of products which move through
successive stages of new and improved products, the temporary task force concept is ineffective.
Next step is to create permanent teams which consists of representatives from each functional
department the teams meet regularly to resolve inter departmental issues and to achieve coordination.
When not involved with issues associated with new product development, the team members work on
their regular assignments.
Teams are an important means to organize work activities. When management uses teams as its
central co-ordination device, we have a team structure.
Conclusion: Groups are powerful in changing the behaviour, attitudes, values and in disciplining
members. Groups can also be used for decision making, negotiating and bargaining. Groups also
influence communication patterns. One can hardly consider a number of people as a team when each
member communicates only with the boss. Effective group interactions also effect motivation. A
group concept helps in understanding the interactions between leaders and followers as well as
among all group members. Team work towards a goal under a leader. Therefore for organizational
effectiveness both groups and teams are required.

39. Difference between Administration and Management

Many experts make no distinction between administration and management and use them as
synonyms. Several American writers consider them as two distinct functions. A few experts treat
administration as a part of management. These three points are explained below:

1. Administration is above management

According to this viewpoint, administration is a top level function while management is a lower
level function. Administration is a determinative (thinking) function concerned with laying down
basic objectives and broad policies of an organization. On the other hand, management is an
executive (doing) function involving the direction of human effort towards the realization of such
objectives. Therefore managers are often called executives. This view is held by eminent
American experts on management.
For Instance-Oliver Sheldon, Florence
According to them administration involves policy formulation whereas management is concerned
with the execution of policies and supervision of day to day operations.

2. Administration is a part of management

59
 European School of thought holds that management is a comprehensive term and administration
is a part of it.
For Instance-Kimball and Kimball
In their opinion, management comprises both policy-making and execution. Administration is
that part of management which involves doing routine things in a known setting. The other and
more important part of management is risk-taking, dynamic and innovative function. Thus, the
European viewpoint is exactly opposite to the American viewpoint.

3. Administration and management are one

Henry Fayol, Chester Barnard, George Terry and many other writers make no distinction
between administration and management.
In practice, the two terms are used interchangeably because both involve the same principles and
functions. In order to resolve the conflict, management may be classified into:
(i)Administrative management
(ii)Operative management
Every manager spends a part of his time in performing administrative management functions and
the remaining time on operative management functions.
Distinction between Administration and Management

(a) NatureAdministration is a determinative or thinking function whereas Management is an

executive or doing function.

(b) ScopeAdministration is concerned with the determination of major objectives and

policies. Management is concerned with the implementation of policies.

(c) LevelAdministration is mainly a top level function whereas Management is largely a

middle and lower level function.

(d) InfluenceAdministrative decisions are influenced mainly by public opinion and other
outside forces. Managerial decisions are influenced mainly by objectives and policies of the
organization.

(e) Direction of human effortsAdministration is not directly concerned with direction of

human efforts. Management is actively concerned with direction of human efforts in the
execution of plans.

(f) Main functionPlanning and control are the main functions involved in Administration.
Directing and organizing are the main functions involved in Management.

(g) Skills requiredIn Administration conceptual and human skills are required whereas in
Management technical and human skills are required.

(h) UsageAdministration is used largely in government and public sector. Management is

used mainly in business organizations.

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 (i) IllustrationsAdministration: Minister, Commander, Commissioner, Registrar
Management : Managing Director, General Manager, Sales Manager

40. Organization

The term organization, may be defined as a collective entity of people who consciously engage in
some activity on a sustained basis for achieving an objective or a set of objectives.
According to Chester Barnard: Organization is a system of consciously coordinated activities of two
or more persons.
The main features of an Organization are:

a) It is man-made and is composed of people-who have their own needs, goals, sentiments and
values.

b) It has an identity of its own, apart from the people associated with it. It is a distinct entity and has
its own form and function.

c) It is characterized by a co-operative human endeavor, activities and processes involving use of

skills, resources and technology.

d) The interactions, relationships and activities need to be determined, coordinated and managed by
a specified group of people within the entity.

e) It is goal-oriented and purposeful-one or more of such goals like survival, entertainment, profit
etc.

41. Organizational Culture

Culture is the set of important understandings that members of a community share in common. It
consists of patterned way of thinking, feeling and reacting that are acquired by language and symbols
that create distinctiveness among human groups. A system of shared values is the building block of
culture.
Organization culture refers to a system of shared meanings held by members that distinguishes the
organization from other organizations. Thus:

Culture is a perception that exists in the organization, not in the individual.

Organizational culture is a descriptive term. It describes rather than evaluates.

Ten characteristics of an organization's culture have been proposed through research:

a) Member identity.
b) Group emphasis.
c) People focus.
d) Unit integration.

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 e) Control.
f) Risk tolerance.
g) Reward criteria.
h) Conflict tolerance.
i) Means-ends orientation.
j) Open-systems focus.
The source of culture is usually a reflection of the vision or mission of the organization's founders. It
results from the interaction between the founders' biases and assumptions and what the first
employees subsequently learned from their own experiences.
The study of organization culture is important because of the following reasons:

1. No organization can operate in isolation to its cultural environment. In other words,

organizations are social system that must inevitably operate to survive within the framework of a
larger cultural system.

2. People in organization come from different cultural backgrounds. They have different
beliefs, customs, understanding, preferences, etc. An organization should develop its specific
culture over a period of time. We can observe organizational culture by studying its values and
norms. The system of shared meanings represents a set of characteristics that are of utmost
importance for the organization. The success of Japanese management is attributed to their
unique cultural values such as life term employment, respect for seniority, collective decision
making, concern for employees etc. Culture is to human collectivity what personality is to an
individual.

42. Organizational climate

Organizations involve cooperative action in which individuals exchange something of value (labor)
for something else of value (the intrinsic and extrinsic rewards of work). Typically, this exchange is
explained in terms of market or bureaucratic phenomena. However, the idea that organizations are
themselves "cultures" is now firmly accepted. William Ouchi, in Theory Z detailed the "culture of
Japanese organizations". He argued these organizational culture factors were important elements in
Japanese success. These cultural factors ranged from a commitment to quality, to the company song
and morning group exercise. These cultural factors are the "soft" elements of the organization, the
beliefs, values, heroes, organizational stories, and assumptions about the role of workers, which
produce very hard results, e.g. quality.
Organizational climate is related to but distinct from organizational culture. Climate measures
whether people's expectations about what it should be like to work in an agency are met. For
example, Theory X and Theory Y organizations reflect different cultural values about the motivations
of people for work and the degree of control necessary for management to assume. Organizational
climate refers to employee acceptance of, for example, a Theory X culture. If many new employees
with Theory Y values join a Theory X organization a climate problem will develop because many
employees do not share the dominate organizational culture value.

43. Is organization a sentient system

A school of thought associates organizations with living beings and draws up an analogy of an
organization as a sentient system. Thus, like any living system, an organization has a life cycle
consisting of four phases:

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 Birth an organization is born (incorporation) when a group of people form a
network of horizontal and vertical relationships to achieve a common objective. Thus is
formed an organization structure that consists of a social group of people, and a structural
framework in which people interact.

Growth with time, and business, the organization needs to grow. As a systematic
combination of people, functions and facilities, the organization structure grows to provide a
mechanism within which people work together for accomplishment of desired objectives.
These people coordinate and accomplish their tasks through lines of authority, like in a living
system.

Aging as the organization gets old, it has rigidity setting in and time to respond to
environmental change increases. The business as well as profitability goes down, and the
environmental pressure begins to show.

Death this stage is the final for the organization, wherein the organization no
longer continues.
The fortune 500 list has changed quite significantly over the past 10 years. Many companies in
the list have been removed and do not find a place. They are now in the aging or decline phase.
Similarly new companies in the growth phase have entered (e.g. InfoTech companies).
In India, a similar trend is apparent. Traditional business houses that have led the arena like
Ruias, Goenkas, Tatas, Birlas are being replaced by Infosys, Satyam, Reliance and the like.

44. Principle of unity of command

The principle of unity of command states that no member of an organization should report to more
than one superior on any single function. The application of this principle is easy in pure line
organization, in which each superior has general authority; however it becomes a complex problem in
actual cases in which some form of staff and/or functional organization is used. In practice,
instructions may be received from several sources without loss of productivity. The problem is to
avoid conflicts in orders from different people relating to the same subject.
The principle of unity of command may be useful in the planning of an organization if it helps to
keep relations between superior and subordinate simple and direct, it is not realistic if it is interpreted
as an immutable law that would eliminate useful relationships among a number of managers.

45. Span of control

Span of Control
A manager at any level in an organization is required to direct, supervise and co-ordinate the tasks of
a few individuals who are placed as his subordinates and who form his work unit. He has direct
authority-responsibility relationships with them. The concept span of control (also known as span of
management or span of supervision) refers to the number of subordinates a manager can directly
manage in a work setting. It denotes the degree of direct authority and responsibility of a manager for
supervision and direction of efforts and activities of his immediate subordinates. If he has only a
small number of subordinates, say 3 or 4,it means that his span of management is narrow. His span
gets widened with an increase in the number of subordinates directly reporting to him.

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Span of management is a classical concept in the literature on organizational structure. An
understanding of the concept helps in finding out the reason for creation of a number of managerial
levels, division of managerial labor and formation of compact work groups in charge of each
manager in an organization.
It is generally agreed that there is an upper limit to the number of immediate subordinates which a
manager can effectively supervise. There are certain human and operational constraints on a manager
which prevent him from effectively supervising and coordinating the activities of more than a limited
number of people directly under him. These constraints create the need for determining the size of the
work group to be placed under the immediate charge of a manager as also the number of managerial
levels in an organization.
Example: Suppose in a business enterprise four major divisional managers report to the chief
executive. Each divisional manager supervises the activities of six departmental unit managers, and
in turn each one of the latter has under him eight section chiefs. Each section chiefs work unit
consists of ten supervisors. In this example, the enterprise has five managerial levels. Given the
limitations of span of management and the consequent creation of a few levels of management, the
chief executive is in a position to indirectly co-ordinate the activities of 24 departmental managers,
48 section chiefs and 80 supervisors, apart from directly supervising four divisional managers. The
span of management of the chief executive is four, while the span of management of each divisional
manager, departmental manager, and section chief is six, eight and ten respectively.
Factors determining span of control
Several organizational, managerial and task-related factors have to be considered in the determination
of appropriate span of control.

a. Quality of delegation of authority: A well defined and clear-minded delegation of authority by

a manager to his subordinates helps him to manage his work unit efficiently and thereby
enhances his ability to manage a larger number of subordinates. If subordinates know what is
expected of them, what are their tasks, and how much authority and discretion they have, the
incidence of their confusion and anxiety as also their dependence on the manager tend to be
lower; this means that the manager does not feel over-burdened with handling a relatively large
number of subordinates.

b. Organizational planning: A well-designed system of organizational policies, procedures, plans,

rules, measurable standards and methods lubricates organizational functioning thereby
smoothening superior subordinate relationships and increasing the possible width of span of
control.

c. Communication system: The extent of direct, regular and noise-free communication between a
manager and his subordinates, as also appropriate interactions between them, determine the span
of control. A stream-lined communication and reporting system tends to facilitate creation of
wide span of control.

d. Staff assistance: The managerial work load of managers can be substantially lightened by
entrusting some tasks to specialist staff groups.

e. Motivation, ability and skills of manager and subordinates: A mature and skillful manager
with requisite leadership and administrative abilities, styles, perspectives and skills has a better
supervisory span.

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 f. Nature of tasks: In a work unit characterized by simple, standardized, stable and routine tasks,
the extent of supervision required tends to be low. This facilitates enlargement of the work unit
under a manager and hence a larger span. If the tasks are complex, variable and highly inter-
related, they call for close and careful co-ordination by the manager and hence his effective span
gets narrow.
The behaviour of above factors differs from organization to organization and from level to level.
Hence the appropriate span of control is also variable.

46. Centralization
Centralization implies the concentration of authority at the top level of the organization. According to
Allen:
Centralization is systematic and consistent reservation of authority at central points within an
organization
In practice there cannot be complete centralization because Absolute centralization means each and
every decision is to be taken by top management which is not practicable.
Factors Responsible for Centralization-

1. To facilitate personal leadership

In the early stages of an enterprise and in small firms, the success depends largely on the
personal leadership of a dynamic and talented leader. Authority may be centralized to
give full scope to facilitate personal leadership which may result in quick decisions and
imaginative action.

2. To provide integration
Coordination of individual efforts is essential to the success of every organization.
Centralized direction is an effective means of unification and integration of individual
efforts. It acts as a binding force on the various parts of the organization.

3. To achieve uniformity of action

Where uniformity of policy and action is required, authority may be centralized at the
top. Such uniformity is often desirable in personnel, purchasing and advertising.
Therefore, authority in these areas tends to be centralized.

4. To handle emergencies
Centralization helps to avoid overlapping efforts and duplication of work. It enables the
management to exercise effective control in order to minimize waste and to achieve
economy in operations.
ADVANTAGES OF CENTRALISATION:

a. Effective utilization of talents of the top leader.

b. All parts move together. A unifying force that integrates all operations.

c. A strong coordinated top management team is developed.

d. Uniformity of policy and plans.

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 e. Best arrangement to tackle emergencies. Resources and information can be mobilized
quickly and effectively.

f. Duplication of functions and facilities is minimized.

DISADVANTAGES OF CENTRALISATION:

a. Delays in decision-making and communication.

b. Centralized power and authority may be abused.

c. Inhibit development of lower level people.

d. Low motivation and morale of lower level people.

e. Fortunes of the enterprise depend on the health and vitality of top executives.

47. Decentralization
Decentralization means dispersal of authority throughout the organization. According to Allen:
Decentralization applies to the systematic delegation of authority in an organization wide
context
Decentralization refers to the systematic effort to delegate to the lowest levels all authority except
that which can only be exercised at central points. It is the distribution of authority throughout
organization. In practice there cannot be complete decentralization because absolute decentralization
implies no control over the activities of subordinates which cannot be possible. Therefore, effective
decentralization requires a proper balance between dispersal of authority among lower levels and
adequate control over them.
According to Ernest Dale-The degree of decentralization in an organization can be measured by
applying the following tests:

a. Number of decisions- Greater the number of decisions made at lower levels,

greater is the degree of decentralization.

b. Importance of decisions- The more important are the decisions made at lower
levels, higher is the degree of decentralization.

c. Effects of decisions-A company which permits both financial and personnel

decisions at lower levels is more decentralized than a company which permits
only operational decisions.

d. Checking of decisions-Decentralization is greater when there is no checking of

decisions made.
FACTORS DETERMINING THE DEGREE OF DECENTRALISATION

1. Size and complexity of the organization

2. Dispersal of operations
3. Degree of diversification
4. History of the enterprise

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 5. Outlook of top management
6. Availability of competent personnel
7. Nature of functions
8. Communication system
9. Planning and control procedures
10. Complexities of the situation
Advantages of Decentralization

a. Relief to top executives

b. Motivation of subordinates
c. Quick decisions
d. Growth and diversification
e. Executive development
f. Effective communication
g. Efficient supervision and control
Disadvantages of Decentralization

a. Expensive
b. Difficulty in coordination
c. Lack of uniformity
d. Narrow product lines
e. External constraints
Effective decentralization requires:

(a) Appropriate centralization

(b) Development of managers
(c) Open communication
(d) Coordination
(e) Adequate controls

48. Formalization
Formalization is the degree to which an organization relies
on rules and procedures to direct the behavior of
employees.
Mechanistic organizations are high in complexity, formalization, and centralization. Organic
organizations are low in complexity, formalization, and centralization. Obviously, team-based
structures and boundary-less organizations are going to have minimal formalization and
centralization. This could create some coordination and control problems for managers. However,
these disadvantages could be minimized by having mechanisms in place to manage conflicts over
coordination and control.

49. Standardization

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 Standards represent the criteria against which actual performance is measured. Standards serve as the
benchmarks because they reflect the desired results or acceptable level of performance. Standards
may be of different kinds:

a) Quantitative Standards: These standards are set in physical or monetary terms. Such standards
are set in production, sales, finance and other areas where results can be measured. They are
further classified as:

(i) Cost standard- It specifies the cost limits within which results should be achieved.

(ii) Revenue standards- It represents the desired level of profits.

(iii)Time standards- It specifies the time limits.

(iv) Physical standards- e.g., quantity of output

b) Qualitative Standards: There are certain areas in which it is not possible to set standards in
quantitative terms. Goodwill, employee moral, motivation, industrial relation etc.

50. Pyramidal and hierarchical organization

A pyramidal or hierarchical organization is based on the principle of span of control. A manager can
supervise a limited number of people. The span of control refers to the number of subordinates a
supervisor can supervise effectively. A wide span yields a flat structure, while a narrow span results
in tall structure.

Graicunas has developed a mathematical formula to show the numerical limitations of the
subordinates a manager can control. If an organization is designed on the above principle, it will look
like a pyramid where the chain of command and communication would flow from top to the bottom.

As an organization grows and as the number of employees rises, the organizational structure tends to
become more formalized. It becomes more bureaucratic. There are two options most likely to be
used. A functional structure expands the concept of functional departmentalization and creates an
organizational design that groups similar or related occupational specialties together.

The divisional structure is an organizational structure made up of autonomous, self-contained units.

However, many contemporary organizations are finding that the traditional hierarchical
organizational designs like the functional and divisional structures aren't appropriate for the
increasingly dynamic and complex environments they face.

One of the new concepts in organization design is the team-based structure which is an organization
structure made up of work groups or teams that perform that organization's work.

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51. Individual excellences
An organization is made of people who have an identity of their own. Thus, the sum total
contributions of the individuals synergise to form organizational effort. Individuals are thus basic
building blocks of the organization. They form groups which in turn form organizational units.
If the individual is deployed in a proper way in the organization, the individual excellences build up,
and it leads to effectiveness. This is in turn also determined by:

Organizational climate

Organizational excellences

T
E
Group excellences
A
M

Individual excellences
Organizational culture
Motivation
Synergy
Individual excellences serve as the source of group effectiveness.

Individual goals

Lower degree of
effectiveness

Organization goals

Individual goals
Higher degree of
effectiveness

Organization goals

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52. Managerial excellences

Managerial excellences are associated with team efforts in an organization. These are achieved when
the manager is able to attain his social, physical and monetary targets. This involves excelling in all
the functions of management starting from planning and ending at controlling.

There are five factors that can impact managerial excellences:

(i) External conditions imposed on the manager by the larger organization of which he is a part.
(ii) Resources, which include member abilities and personality characteristics.
(iii) Structure that shapes managers' behavior and includes roles, norms, status, group size, and
formal leadership.
(iv) Communication patterns used to exchange information, group decision processes, leader
behavior, power dynamics, conflict interactions, and other actions.
(v) Tasks, which involves the complexity and interdependence of these tasks the manager is
responsible for.
External
conditions

Abilities,
personality
Complexity &
interdependence Manageria
l
Excellence
s

Roles, norms, formal

leadership
Power dynamics,
group processes

53. Organizational structure

The right organizational structure can play an important role in an organization's evolution.
Organizing is the process of creating an organization's structure.
Organization structure is an organization's framework as
expressed by its degree of complexity, formalization, and
centralization . Complexity is defined as the amount of differentiation in an organization.

70
 Formalization is the degree to which an organization relies on rules and procedures to direct the
behavior of employees. Centralization is defined as the concentration of decision-making authority in
upper management. Decentralization is the handing down of decision-making authority to lower
levels in an organization. Organization design is the development or changing of an organization's
structure.
Factors affecting structure:
Three major contingency factors that affect organization design include strategy, size, and
technology.

Strategy affects organization design in that structure should change as an organization's strategy
changes.

Size affects organization design because as organizations grow, they tend to become more
formalized and bureaucratic.

Finally, technology affects organization design because the production process should fit with
the type of organization structure in order to be effective.
Managerial implications:
A functional structure expands the concept of functional departmentalization and creates an
organizational design that groups similar or related occupational specialties together.
The divisional structure is an organizational structure made up of autonomous, self-contained units.
However, many contemporary organizations are finding that the traditional hierarchical
organizational designs like the functional and divisional structures aren't appropriate for the
increasingly dynamic and complex environments they face.
One of the new concepts in organization design is the team-based structure which is an organization
structure made up of work groups or teams that perform that organization's work.

54. MBO

MBO is both a philosophy and a technique of management. It represents a rational and systematic
approach to management wherein measurable goals are set up in consultation with subordinate
managers and the contribution of each individual is judged in terms of such goals.
According to George Odiorne:
MBO is a process whereby the superior and the subordinate managers of an enterprise jointly identify
its common goals, define each individuals major areas of responsibility in terms of the result expected
of him and use these measures as guides for operating the unit and assessing the contribution of each
of its members.
According to John W. Humble:
MBO is a dynamic system which seeks to integrate the companys need to clarify and achieve its
profit and growth goals with the managers need to contribute and develop himself. It is a demanding
and rewarding style of managing a business.
Characteristics of MBO

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1. Mutual Goal Setting: Fundamental to the MBO process is the mutual setting of objectives
between each position holder and his or her superior and the use of these objectives as standards
for evaluating the employees performance.

2. Compatibility: MBO is a process of setting compatible objectives at all levels of the organization.
The process begins with the setting of overall organizational objectives at the top. Using these
objectives as guides, positions at middle and lower levels of the hierarchy determine their
objectives making them compatible with organizational objectives and with each other.

3. Measurable Objectives: MBO involves the setting of specific measurable objectives for a future
time period. The idea is to assign each employee a specific target which is time bound. One
approach is to set qualitative objectives that indirectly measure the real goal being sought. For
example: design and run ten community service advertisements may be an objective in public
relations.

4. Systematic: MBO is a formal process that begins with goal setting and continues through
performance review.

5. Continuity: Under MBO, performance appraisals are conducted jointly on a continuing basis with
provision for regular periodic reviews. MBO is a dynamic approach that attempts to integrate the
individual with the organization.

6. Key Result Areas: The emphasis in MBO is on performance improvement in the areas which are
of critical importance to the organization as a whole. Key and sub-key areas are identified for
each function as shown in the following example:
Finance (Key Area)
Sub-Key Areas:

(i) Cash flow

(ii) Dividend Policy

(iii) Debt-equity Ratio

(iv) Sources of Funds

Objectives of MBO
Management by Objectives is intended primarily:

1. To measure and judge performance;

2. To relate individual performance to organizational goals;
3. To clarify both the job to be done and the expectations of accomplishment;
4. To foster the increasing competence and growth of the subordinates;
5. To enhance communications between superior and subordinates;
6. To serve as a basis for judgements about salary and promotion;
7. To stimulate the subordinates motivation and

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 8. To serve as a device for organizational control and integration.

55. What are advantages and disadvantages of MBO?

DIAGNOSIS GOAL SETTING

Organizational goals and
Understanding the organization strategies
Obtaining commitment Unit and individual goals
Review by superior
Defining jobs
Joint agreement
Training people

Recycle
FINAL REVIEW

Discussion ACTION PLANNING

Analysis activities required
INTERIM REVIEWS
Motivation Environmental changes sequence of activities
Rewards Revise goals & action
plans roles and relations
Control time and resources
ADVANTAGES OF MBO
MBO offers the following advantages:

1. Improved Planning: MBO produces clear and measurable performance goals. A network of
goals is created and appropriate action plans are formulated for goal achievement. There is
effective matching of goals and resources. Clear goals and action plans generate concrete
thinking and lead to result-oriented and forward planning. MBO forces managers to plan for
results rather than plan for work. It ensures that goals of each department are consistent with the
overall objectives of the organization.

2. Team Work: MBO results in better communication between superior and subordinates which
reduces conflict. The whole management team is actively involved in goal setting. There is
integration of lower level goals with organizational goals. Different individuals are fused into a
co-operative team. MBO clarifies the job assignment and responsibility of each individual.

3. Effective self-control: A clear set of verifiable goals provides effective standards for self-
control. MBO provides a mechanism by which managers can ensure that enterprise is moving in
right direction.

4. Objective Appraisal: MBO permits impartial appraisal because employee performance is

evaluated against verifiable and mutually agreed criteria. The performance of every individual is
evaluated in terms of the mutually agreed targets. Under MBO the superior does not evaluate the

73
 subordinate but his performance. MBO also allows employees to monitor and control their own
performance. Such self-appraisal facilitates personal development. MBO helps to develop
managers who have potential for growth.

5. Motivation and Morale: MBO leads to better interpersonal relations through involvement and
recognition of people at all levels. It provides greater opportunities to make personal contribution
and to accept more responsibility. Participative goal setting and two-way communication
improve the commitment and morale of employees. Superior managers assume a supportive role
and subordinates are allowed to exercise self-direction and self-control. This results in innovation
and creativity on the part of subordinate managers.
Thus, MBO is a result-oriented and rational philosophy. It permits management by results in place of
management by crisis. Many organizations both in the public and private sector have benefited a lot
through the application of MBO.
LIMITATIONS OF MBO
MBO has several weaknesses, some of which are inherent in the system while others arise while
introducing it. The main hurdles in successful application of MBO are as follows:

1. Goal-setting Problems: Very often it is very difficult to set truly verifiable and measurable
goals. Over-emphasis on quantifiable and easily measurable goals may result in neglect of crucial
qualitative goals like job satisfaction. Similarly, over-emphasis on short-term goals may be at the
cost of long-term goals. Goals once set may be followed rigidly leading to inflexibility in the
organization.

2. Time Consuming: MBO requires a great deal of time in setting measurable goals through
consensus. In the initial stage several meetings may have to be held to bring confidence in
subordinates. The formal periodic reviews and final appraisal sessions also consume a lot of time.

3. Increased Paperwork: MBO results in a plethora of newsletters, instruction booklets, training

manuals etc. Subordinates have to fill in forms and submit detailed reports on their performance.

4. Pressure-oriented: Under MBO managers are forced to assume a supportive role. In many cases
MBO programmes indiscriminately force improvement on all employees. An MBO programme
based on reward-punishment psychology may prove self-defeating in the long run.

5. Undermining Leadership: In a scheme of MBO, leadership does not find a central place. MBO
is based on a particular type of democratic leadership which may not be successful in all
situations.

6. Participation Problem: MBO requires mutual goal-setting by the superior and the subordinate.
In many cases, the goals are set by the superior because he has no time to discuss it with the
subordinate or he is not willing to share power with the subordinate. In other cases, the
subordinate may not be willing to set goals for himself because he is incompetent or he fears
criticism from the superior.

7. Inflexibility: MBO may introduce inflexibility in the organization. Once goals are set down, the
superior may not like to modify them due to fear of resistance from the subordinates.

56. Cohesive group

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 The term group cohesiveness refers to the extent to which members of a group are united and
work together in order to achieve a common objective. It is the spirit of closeness and solidarity of
members of a group.
The main characteristics of a cohesive group are:

1. The strength of interpersonal attachment

2. Attractiveness among members

3. The level of motivation among members not only to remain in the group, but

4. To identify themselves with the goals and culture of the group

5. Commitment by employees to the success of goals

6. Association with the groups fortunes.

Advantages:
In a highly cohesive group

Members develop common attitudes, values and behaviour patterns.

They actively follow the norms of the group and follow the requirements of group
discipline.
They are loyal to the groups goals and leadership influences.
Problems are solved collectively and decision making ability is developed.
Members develop positive feelings towards their work and they tend to perform well.
Mutual regard, trust and warmth in interpersonal relations is developed.
Association with the group leads to considerable satisfaction.
Stable membership over fairly long periods of time.
Collectively and courageously handling of problems.

57. Group decisions

Group decisions are those which are made by more than one manager joining together for the
purpose. In an organization, two or more managers at the same or different levels put their heads
together, jointly deliberate on the problem, information and alternatives and hammer out a decision
for which they assume collective responsibility.
For Example: Decisions which have inter-departmental effects like, a product related decision
affecting manufacturing, purchasing and marketing departments, are sometimes made by forming a
committee composed of responsible executives of the three departments.
Group decision-making is not new in organization. The Board of Directors is a decision-making unit.
As a group, the board members make several vital corporate decisions. In organizations, individual
managers as a group make decisions.

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The decision-making function and process get enriched by the pooling of diverse expertise,
knowledge, authority and perspectives represented by the group. Elaborate group deliberation and
consideration of alternative courses from several angles tend to ensure that decisions of high quality
are made. To the extent that authority for making decisions is entrusted to the group, it gets diffused
among the members.
In cases where a manager involves his group of subordinates in decision making, the decisions so
reached tend to enjoy a high degree of acceptance.
The disadvantages of group decision-making are delays in decision-making, lack of rationality and
responsibility among group members, dilution of the quality of decisions by compromise and
conformity among members of the group and so on.

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 MANAGEMENT PROCESS & ORGANISATION
IMT GURGAON STUDENTS

Handout III

Solution to Case Studies

CASE # 1
a) A chain of command, which also happens to be a chain of communication and
control, is a vertical line of authority from the top management to every subordinate
managerial position.
After reading this case study, I feel that a chain of command never prevailed
between
Mr. Rao and Ms. Jain. A hierarchy or a formal channel defining the authority,
responsibility, and communication relationship between Mr. Rao and Ms. Jain never
existed.

General Manager

Personal Computer
Secretary Operator
As highlighted in this case study, Mr. Rao was working as Personal Secretary
whereas Ms. Jain was working as a Computer Operator in a large government
organization. Both were reporting to the General Manager.
Mr. Rao was polite and helpful to the General Manager and other seniors whereas
he was autocratic in dealing with juniors in the organization. It seems that Mr. Rao
even considered Ms. Jain as his subordinate and his attitude towards Ms. Jain was a
bit harsh.
Hence, I don't feel that a chain of command existed between Mr. Rao and Ms. Jain.
b) In my opinion, the reasons which made the General Manager ignore the noise
outside his room could be:
1. General Manager knew the reasons behind the noise and the parties
involved in the heated exchanges.
2. The heated exchanges between Mr. Rao and Ms. Jain were a normal or a
routine affair.
3. General Manager, it seems was mentally prepared that it was not necessary
to involve himself in such arguments that usually prevailed between his personal
secretary and computer operator.

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 4. I feel that The General Manager was only concerned about the work being
done rather than emphasizing on a conducive work environment wherein every
employee feels at ease to work in and thereby considering such an organization
as his/her second home.
5. Since a chain of command was not defined in the organization between Mr.
Rao and Ms. Jain, I feel that the General Manager never wanted to get involved
in such arguments between Mr. Rao and Ms. Jain and thereby taking a particular
person's side or favoring either Mr. Rao or Ms. Jain.
6. Another reason for ignoring the noise could be that the General Manager
never wanted to spoil his relationship either with Mr. Rao or with Ms. Jain.
7. General Manager, it seems had left it for time to sort out the relationship
between Mr. Rao and Ms. Jain.

c) Any General Manager of an organization holds a very responsible and authoritative

position. After going over this case study, I feel that the General Manager should
immediately do the following:
o Define a hierarchy or a formal channel, which clearly highlights the authority,
responsibility, and communication relationship between Mr. Rao and Ms. Jain.
o He should try to sort out the differences between Mr. Rao and Ms. Jain as
soon as possible cause it might lead to a bad example in the entire organization
and might effect the overall image of the organization.
o He should take both Mr. Rao and Ms. Jain into confidence and try to figure out
the root cause of such heated arguments or exchanges.
o The manager should change their seating arrangements, thereby ensuring that
Mr. Rao and Ms. Jain do not share the same cabin.
o The manager should talk to both Mr. Rao and Ms. Jain individually and tell
them that in case they want to become role models and want to gather respect
from their subordinates, they need to behave in a professional manner.
o The manager should discuss the significance of an organization, group
cohesiveness and team effort. The emphasis should be laid on educating the
entire organization so that such incident is not repeated in near future.
o Mr. Rao should be instructed to change his autocratic style of dealing with
subordinates in an organization. He should be complemented on his attitude
towards his seniors and he should be asked to maintain the same attitude while
dealing with his subordinates.
o A verbal warning should be given to both Mr. Rao and Ms. Jain.
o As a last resort, if the manager feels that both Mr. Rao and Ms. Jain are at
fault, he can ask both of them to leave the organization.

78
CASE # 2
a) The Executive Director who was holding a very senior managerial position in
Gulshan Fabrics was in favor of a traditional management philosophy. His ego was
hurt during a meeting with zonal managers, when he received a suggestion favoring
humane aspect in the organization from his subordinate who happened to be head
of Mumbai zone.
The Executive Director didn't take the suggestion on a positive note as he felt that it
was an open criticism against him and that too by his subordinate in front of all other
zonal managers. He also wanted to express his feelings in front of other zonal
mangers, thus portraying that he won't accept or agree upon any suggestion, which
he is not comfortable with, or a suggestion, which comes, in the way of his
management philosophy.
Being a practitioner of traditional organizational characteristics - efficiency,
rationality, order, conformity and formality, the Executive Director had a mindset and
accepting change in the organization functioning and that too after incorporating a
suggestion from a subordinate was an uphill task.
A careful study of the facts and their analysis strongly establish that the Executive
Director is a Theory X manager because:
o He doesn't lay emphasis on employees.
o The Executive Director doesn't believe in cooperation between management
and workers.
o No emphasis is laid on participative management and decentralization.
o The Executive Director believes in imposition of control measures in order to
increase the efficiency of the workers.
o Emphasis is laid on over-centralization of managerial authority.
o The Executive Director is in favor of Autocratic orientation of managers.
o He doesn't believe in providing a free flow of communication in the
organization.
b) Yes, I feel that G.P.Basotia was right in suggesting that organization should become
more humane. The only mistake that he made was of giving the suggestion in front
of other zonal mangers.
G.P. Basotia should have given this suggestion to the Executive Director in private.
He should have also explained the logic behind such thinking, that:
o The management is responsible for designing conducive organizational
structures and processes so as to enable people to realize their potential,
release their energies and contribute their best to the goals of the
organization and to fulfillment of their own personal needs.
o It would encourage open communication, participative management,
flexibility, self-direction, self control among the employees along with
creativity and innovation.
Had the performance report of Mumbai presented by G.P. Basotia before making the
suggestion, the Executive Director wouldn't have got irritated. The Executive
Director would have given a serious thought on the suggestion so made.

In fact the performance report would have made the Executive Director very

79
 happy and in addition he would have also congratulated G.P.Basotia for
this achievement in front of other zonal managers.

CASE # 3

i. Authority is the formal right vested in the managerial position to perform his
managerial functions and it includes right to issue instructions to subordinates and
right to influence events for achieving certain goals. This authority is capable of
delegation, dissemination to lower levels of the organization. In the given case of
fashion fabric Hiren Dasgupta is having formal right to get work done through Harish
mastana, one of his sales representatives. Thus, Dasgupta is having authority over
Harish. Similarly, Mr. K.T. Parekh has authority over the Sales Manager by virtue of
his position as General Sales Manager.

The terms responsibility and accountability are often used interchangeably by some
management theorists. However, it has also been distinguished by some other
theorists on the following lines:

Responsibility is an obligation of the person to whom authority is entrusted to perform

the assigned task. In another sense, it is a set of task and duties assigned to a person.
On the other hand accountability connotes personal answerability for decisions,
actions and results on the part of a person for his actions and his subordinates actions
to his superior. In the context of given case, Harish, is both responsible and
accountable to Dasgupta for the achievement of sales targets. On the similar lines,
relationship of Dasgupta with that of General Sales Manager can also be defined.
However, at the same time, Dasgupta is also accountable to the General Sales
Manager for the work done by Harish.

Power refers to ability of an individual to gain influence and dominance over events,
things and beliefs in ways desired. Authority can also be associated with power, in the
sense that authority is form of power generally associated with formal organizations.
Thus, power may be based on the formal position or inherent in personality of an
individual. It can be found that Union President is not having any formal authority to
reinstate or give instructions to General Sales Manager for reinstatement of his
nephew Harish Mastana. However, he has the power by virtue of his position as Mill
Union Mazdoor President, since he can influence work behavior and actions of
workers of the company.
ii. Authority, power, responsibility, accountability, relationships have both positive and
negative impacts. It is only through such relationships an organization plans, works
and tries to achieve its objectives. It is only through flow of authority and
responsibility an organization exists and work is performed.
The peculiarity in the case lies in the power held by Mill Mazdoor Union President.
Positive impact of such power held by Union President is that it keeps a check on
Managers and make them cautious and alert. It will also force Managers to think of
other alternatives before resorting to any harsh treatment, such as retrenchment in
the above case. Moreover, agreeing to the suggestion of Mill Mazdoor Union
President will ensure smooth functioning of the company through union cooperation.

80
 However, in the given case, it is highly likely that the impact would be towards the
negative side. There are chances that Dasgupta will feel demotivated to perform his
duties. He will feel dejected and sad about the incident. He would be concerned
about encroachment of his authority by the power of union leader. On the other
hand, Harish will unnecessarily feel more powerful as compared to his superior. He
may continue with his casual approach towards his work by not meeting the
standards and expectations of the organization.
This will also give wrong signals to his colleagues, that work can be avoided in this
organization through union leaders or through the use of power tactics over the
management.

Thus such relationships can lead to anti-work environment in the company.

CASE # 4

(a) Social responsibility can be defined as the responsibility of a business

towards the society. A business responsibility can be towards:
1. Performing economic functions - Production & Supply of goods
2. Consideration of interests of the society
3. Undertaking economic activities
4. Promotion of education, removal of poverty, etc
5. Encouraging social welfare and preserving social values
Any successful organization or enterprise has social responsibility built into its
objectives, policies, strategies and plans and also their day to day functioning.

(b) The thermometer manufacturing plant in Ahmedabad was closed because

traces of mercury were found and that too in large quantities in the village where its
factory was located. Hence an issue was raised by the social activists on the
following grounds:
o Any business enterprise gets resources from the society and it manufactures
goods and services for the society. Hence, Healthy & Hearty (India) Ltd, a
business organization being a sub-system of the larger society has no right to
survive if it damages the society. A relationship between a business house and
the society can be maintained only through a socially responsible behavior.
o Social obligations form part of the ethics of business organizations.
o A business house involves a large number of groups who are interested in
the functioning of the organization. The expectations of the stakeholders should
be taken into consideration by Healthy & Hearty (India) Ltd.
o The objective of social responsibility promotes objectives of business houses.
o Every business house during its functioning has to take decisions.
Acceptance of social responsibility as one of the main objectives ensures that
the business house makes decisions in interests of the society. This objective
however was missing in Healthy & Hearty (India) Ltd.
o Since Healthy & Hearty (India) Ltd was not working in the direction of social
responsibility, the issue of goodwill was questioned.

81
 o Healthy & Hearty (India) Ltd was trying to become a professional
organization without catering towards the needs of the society.

(c) In case the state pollution board serves a notice, the Executive Director
should reiterate the fact that the company is extra conscious in its social
responsibility. At the same time, the Executive Director should emphasize on:
1) Installation of the state-of-art effluent treatment plant with zero discharge
facility
2) Green belt being around the factory

The Executive Director should argue in favor of Social Responsibilities of Business

by discussing the following points:

o A company gets resources from the society and it manufactures goods and
services for the society. A relationship between a business house and the
society can be maintained only through a socially responsible behavior.
o Business organizations are not only concerned about making money. Social
obligations also form part of their ethics.
o A business house involves a large number of groups who are interested in
the functioning of the organization. The expectations of the stakeholders should
be taken into consideration by all the business houses.
o The objective of social responsibility promotes objectives of business houses.
o Every business house during its functioning has to take decisions.
Acceptance of social responsibility as one of the main objectives ensures that
the business house makes decisions in interests of the society.
o Any business house working in the direction of social responsibility can avoid
imposition from the government.
o Working in the direction of social responsibility enables a business house to
improve its goodwill.
o All business houses are becoming professionals and professionalism
involves catering to the needs of the society.
o A business organization acquires social power through economic and
commercial activities and services. This social power needs to match with social
responsibility and then only it can avoid being misused.
o Companies and their management show initiative in economic matters. They
prove their worth and leadership in achievement of economic goals. Society also
has a right to expect from companies and their management a degree of
involvement, initiative, support and contribution in solving social problems.
(d) Devising of an action plan
Healthy and Hearty (India) Ltd. should:
(a) Stop making decisions and undertaking activities which seriously interfere
with the genuine interests of other sections of the society.
(b) Aim at serving their customers with whole-some products at fair prices,
treating their employees with decency and dignity, honoring the commitments to

82
 their suppliers and creditors, honestly observing the laws of the land, and
adopting efficient production techniques.
(c) Consider the network of interest groups who have a stake in the effective and
efficient functioning of enterprises.
(d) Show social awareness, concern and commitment and uphold the values,
beliefs and interests of society and of the various groups therein.

CASE # 5
(a) The possible factors which made Beta Ltd. sell its brand (Yummy and Tasty) are:
Need for restructuring of its unmanageable product collection Beta Ltd.
realized that it was not able to manage the household brands namely, Yummy
and Tasty.
Low business potential for the company Yummy and Tasty turned out to be
minor or secondary businesses for Beta.
Unable to meet its objectives Some of the most important objectives of a
business enterprise are:

Survival
Profit maximization
Growth
Stability
Efficiency
Beta Ltd. realized that manufacturing of its brand (Yummy and Tasty) are not
in line with its objectives.
(b) Business Strategy for Alpha Acquisition strategy
Alpha International adopted Acquisition Strategy in order to achieve its growth
objectives.
Features of Acquisition strategy:
1. It reduces the time, risks and skills involved in assessing internal growth
opportunities and utilizing them in order to develop the necessary resource base.
2. Achieves a measure of synergy between the parent and the acquired
enterprises.
From the point of view of Alpha International, manufacturing of Tasty and Yummy
household brands would result in profits. The reason being that:
The company makes the same type of products and hence growth in its
brands without additional input or distribution costs.
Alpha International can use the same set of distributors to place these brands
(Yummy and Tasty) in shops. It would result in an increase of 5-7% in companys
turnover in the first year.
(c) Business Strategy for Beta Retreat Strategy
Beta Ltd. adopted Retreat Strategy in order to save its vital interests.
Features of Retreat Business Strategy Beta Ltd:

83
 1. Beta Ltd. required assistance in order to cope up with adverse situations in
the environment Two of its brands Yummy and Tasty were not doing well.
2. Minimization of any negative impacts Retreat Strategy was adopted with an
overall view to help Beta Ltd. to regroup its resources and strive towards growth.
Generally, Retreat Strategy involves temporary and partial set backs, withdrawal of an
organizations products from the markets, sale of manufacturing facilities, etc.
Beta Ltd:
Planned for restructuring of its products
Decided in favor of selling off its low business potential products(Yummy and Tasty)

MANAGEMENT PROCESS & ORGANISATION

IMT GURGAON STUDENTS

Handout II
Case Studies
CASE # 1
Mr. P.R.S Rao and Ms. Shilpa Jain were respectively working as Personal Secretary
and Computer Operator to the General Manager in a large government organization.
The Personal Secretary was very nice and courteous to the General Manager and other
seniors in the organization. He would also go out of the way to help them in personal
non-office jobs. At the same time, he was autocratic in dealing with juniors in the
organization. Many a times, he was a bit harsh with Ms. Shilpa who was directly
reporting to the General Manager. This has led to void in the relationship between the
two, who were also sharing the cabin attached to the office of General Manager. The
cabin was clumsy and dirty with papers scattered all around the room. There were
cluttered wires and stains on the floor.
One hot summer day Ms. Shilpa came to office and switched on the ceiling fan. There were loose
papers lying on the table of Mr. Rao. With the velocity of air from the fan papers on the table of
Mr. Rao went helter-shelter in the room. Ms. Jain saw the flying papers but kept on doing the
urgent work given by the General Manager.
Mr. Rao, who was half an hour late for the office, was irritated to see his table. He
shouted at Ms. Shilpa and ordered her to sort all the papers on the floor and arrange
them properly on his table. Ms. Shilpa refused and there were heated exchanges
between the two. The General Manager heard the noise but ignored it.

84
 That afternoon Mr. Rao submitted a note to the General Manager for his intervention. He
also accused Ms. Shilpa of dereliction of duties and insubordination on several
instances.
Discuss the chain of command prevailing between Mr. Rao and Ms. Jain.
What could be the reasons which made the General Manager to ignore the noise
outside his room?
What should the General Manager do now?

CASE # 2

Gulshan Fabrics, the national readymade garments departmental chain is managed by Executive
Director. The company has its Head Office in Bangalore. It outsources its manufacturing of
garments. The company was divided into different zones with zonal offices in all metropolitan
cities.

In a meeting with Zonal Managers, the Executive Director received a suggestion from
the head of Mumbai zone, G.P. Basotia, that organization should become more humane
to employees. This irritated the Executive Director. He immediately remarked
addressing to the Zonal Manager of Mumbai.

"I have been closely watching the operations of Mumbai branch. There has been a lot of
laxity in the managing affairs of employees. The human relations they teach in a
management course do not work in real life. You must exercise better control over
employees."

The Zonal Manager apologized to the Executive Director for making an inappropriate
suggestion. At the same time he presented a report wherein Mumbai zone has broken
all earlier records of growth.

Why did Executive Director got angry? Is he a theory X manager or a theory Y

manager?
Do you think G.P. Basotia was right in suggesting that organization should
become more humane? What would have happened if the performance report of
Mumbai was presented before making the suggestion?

CASE # 3

Hiren Dasgupta, Sales Manager of Fashion Fabrics, Eastern Region did not find the
performance of Harish Mastana, one of his sales representatives, upto the mark. On six
separate occasions, Hiren personally discussed with Harish about his various problems,
suggesting ways and means so that he might improve his sales performance. During the
last conference, Hiren said, "Harish, I'm going to have to let you go if your sales are not upto
quota this month."

85
Harish failed to meet his quota. Hiren could not bear with the situation and decided to go for further
action. He wrote him a letter informing him of his dismissal. Three days later, Hiren received a call
from Mr. K.T. Parekh, General Sales Manager, "Hiren, I want you to put Harish Mastana back on the
payroll immediately. You know he is the nephew of Mill Mazdoor Union President." "O.K." signed
Hiren, "I'll see that it's done."
a) What are the authority-power-responsibility-accountability relationships in this case?
b) What can be the possible impact of these relationships on the functioning of the
company?

CASE # 4
In a news article Gujarat based Healthy and Hearty (India) Ltd. has been accused of
dumping hazardous chemicals around its plant located in the suburbs of Vadodra. The
Executive Director was very disturbed. Two years back the company was forced to shut
sown its thermometer manufacturing plant in the outskirts of Ahmedabad, when traces
of mercury were found in large quantities in the village where its factory was located.
State and the social activists ensured the closure of plant. Since then, company was
extra conscious in its social responsibility. A state-of-art effluent treatment plant with
zero discharge facility was installed at the factory in Vadodra. There was a green belt
around the factory and the water from the effluent treatment plant was reused in the
factory and was also used in the irrigating the green belt.
To analyse the problem, samples were collected in the vicinity of plant and it was found
that the chemicals present were those which were not even used in any of the
manufacturing processes or operations at the factory. The source of contamination must
be other factories.
(a) What do you mean by social responsibility.
(b) Why was the thermometer manufacturing plant in Ahmedabad closed.
(c) If the state pollution board serves them with a notice, what should Executive Director
do?
(d) Devise and action plan for the Executive Director to reduce the impact of article in
the Newspapers.
CASE # 5
Delhi-based Alpha International is close to acquiring popular household brands Yummy
and Tasty form Beta Ltd. The deal, at rupees thirty-five crores was announced at a joint
press conference.
It was sometimes back that Beta felt the need to restructure its unwieldy product
portfolio and exist brands which had low business potential for the company. Beta had
put these brands on sale late last year. Alpha has emerged as the highest bidder for
them. The company, stated in the press release that Alpha is buying the brands but not
their manufacturing facility in Noida (near Delhi), because the plant also makes other
food products which are Betas core food brands.
While Yummy and Tasty are marginal businesses for Beta, (around Rs.20 crore per
annum) management consultants felt that they are a good fit in Alphas product portfolio.
The company makes the same genre of products and can grow the brands without
additional input or distribution costs. Tasty and Tummy are food brands that Alpha can

86
manufacture in its existing plants spread across seven locations in Punjab and
Maharashtra. The company can also use the same set of distributors to place these
brands in shops. Financial Analysts expect them to add 5-7% to Alphas Rs.250 crore
turnover in the first year.
(a) What are the possible factors which made Beta sell its brand?
(b) Discuss the business strategy for Alpha.
(c) Discuss the business strategy for Beta.

87
 MANAGEMENT PROCESS & ORGANISATION
IMT GURGAON STUDENTS

Handout III

Solution to Case Studies

CASE # 1
d) A chain of command, which also happens to be a chain of communication and
control, is a vertical line of authority from the top management to every subordinate
managerial position.
After reading this case study, I feel that a chain of command never prevailed
between
Mr. Rao and Ms. Jain. A hierarchy or a formal channel defining the authority,
responsibility, and communication relationship between Mr. Rao and Ms. Jain never
existed.

General Manager

Personal Computer
Secretary Operator
As highlighted in this case study, Mr. Rao was working as Personal Secretary
whereas Ms. Jain was working as a Computer Operator in a large government
organization. Both were reporting to the General Manager.
Mr. Rao was polite and helpful to the General Manager and other seniors whereas
he was autocratic in dealing with juniors in the organization. It seems that Mr. Rao
even considered Ms. Jain as his subordinate and his attitude towards Ms. Jain was a
bit harsh.
Hence, I don't feel that a chain of command existed between Mr. Rao and Ms. Jain.
e) In my opinion, the reasons which made the General Manager ignore the noise
outside his room could be:
1. General Manager knew the reasons behind the noise and the parties
involved in the heated exchanges.
2. The heated exchanges between Mr. Rao and Ms. Jain were a normal or a
routine affair.

88
 3. General Manager, it seems was mentally prepared that it was not necessary
to involve himself in such arguments that usually prevailed between his personal
secretary and computer operator.
4. I feel that The General Manager was only concerned about the work being
done rather than emphasizing on a conducive work environment wherein every
employee feels at ease to work in and thereby considering such an organization
as his/her second home.
5. Since a chain of command was not defined in the organization between Mr.
Rao and Ms. Jain, I feel that the General Manager never wanted to get involved
in such arguments between Mr. Rao and Ms. Jain and thereby taking a particular
person's side or favoring either Mr. Rao or Ms. Jain.
6. Another reason for ignoring the noise could be that the General Manager
never wanted to spoil his relationship either with Mr. Rao or with Ms. Jain.
7. General Manager, it seems had left it for time to sort out the relationship
between Mr. Rao and Ms. Jain.

f) Any General Manager of an organization holds a very responsible and authoritative

position. After going over this case study, I feel that the General Manager should
immediately do the following:
o Define a hierarchy or a formal channel, which clearly highlights the authority,
responsibility, and communication relationship between Mr. Rao and Ms. Jain.
o He should try to sort out the differences between Mr. Rao and Ms. Jain as
soon as possible cause it might lead to a bad example in the entire organization
and might effect the overall image of the organization.
o He should take both Mr. Rao and Ms. Jain into confidence and try to figure out
the root cause of such heated arguments or exchanges.
o The manager should change their seating arrangements, thereby ensuring that
Mr. Rao and Ms. Jain do not share the same cabin.
o The manager should talk to both Mr. Rao and Ms. Jain individually and tell
them that in case they want to become role models and want to gather respect
from their subordinates, they need to behave in a professional manner.
o The manager should discuss the significance of an organization, group
cohesiveness and team effort. The emphasis should be laid on educating the
entire organization so that such incident is not repeated in near future.
o Mr. Rao should be instructed to change his autocratic style of dealing with
subordinates in an organization. He should be complemented on his attitude
towards his seniors and he should be asked to maintain the same attitude while
dealing with his subordinates.
o A verbal warning should be given to both Mr. Rao and Ms. Jain.
o As a last resort, if the manager feels that both Mr. Rao and Ms. Jain are at
fault, he can ask both of them to leave the organization.

CASE # 2
c) The Executive Director who was holding a very senior managerial position in
Gulshan Fabrics was in favor of a traditional management philosophy. His ego was
hurt during a meeting with zonal managers, when he received a suggestion favoring

89
 humane aspect in the organization from his subordinate who happened to be head
of Mumbai zone.
The Executive Director didn't take the suggestion on a positive note as he felt that it
was an open criticism against him and that too by his subordinate in front of all other
zonal managers. He also wanted to express his feelings in front of other zonal
mangers, thus portraying that he won't accept or agree upon any suggestion, which
he is not comfortable with, or a suggestion, which comes, in the way of his
management philosophy.
Being a practitioner of traditional organizational characteristics - efficiency,
rationality, order, conformity and formality, the Executive Director had a mindset and
accepting change in the organization functioning and that too after incorporating a
suggestion from a subordinate was an uphill task.
A careful study of the facts and their analysis strongly establish that the Executive
Director is a Theory X manager because:
o He doesn't lay emphasis on employees.
o The Executive Director doesn't believe in cooperation between management
and workers.
o No emphasis is laid on participative management and decentralization.
o The Executive Director believes in imposition of control measures in order to
increase the efficiency of the workers.
o Emphasis is laid on over-centralization of managerial authority.
o The Executive Director is in favor of Autocratic orientation of managers.
o He doesn't believe in providing a free flow of communication in the
organization.
d) Yes, I feel that G.P.Basotia was right in suggesting that organization should become
more humane. The only mistake that he made was of giving the suggestion in front
of other zonal mangers.
G.P. Basotia should have given this suggestion to the Executive Director in private.
He should have also explained the logic behind such thinking, that:
o The management is responsible for designing conducive organizational
structures and processes so as to enable people to realize their potential,
release their energies and contribute their best to the goals of the
organization and to fulfillment of their own personal needs.
o It would encourage open communication, participative management,
flexibility, self-direction, self control among the employees along with
creativity and innovation.
Had the performance report of Mumbai presented by G.P. Basotia before making the
suggestion, the Executive Director wouldn't have got irritated. The Executive
Director would have given a serious thought on the suggestion so made.

In fact the performance report would have made the Executive Director very
happy and in addition he would have also congratulated G.P.Basotia for
this achievement in front of other zonal managers.

90
CASE # 3

i. Authority is the formal right vested in the managerial position to perform his
managerial functions and it includes right to issue instructions to subordinates and
right to influence events for achieving certain goals. This authority is capable of
delegation, dissemination to lower levels of the organization. In the given case of
fashion fabric Hiren Dasgupta is having formal right to get work done through Harish
mastana, one of his sales representatives. Thus, Dasgupta is having authority over
Harish. Similarly, Mr. K.T. Parekh has authority over the Sales Manager by virtue of
his position as General Sales Manager.

The terms responsibility and accountability are often used interchangeably by some
management theorists. However, it has also been distinguished by some other
theorists on the following lines:

Responsibility is an obligation of the person to whom authority is entrusted to perform

the assigned task. In another sense, it is a set of task and duties assigned to a person.
On the other hand accountability connotes personal answerability for decisions,
actions and results on the part of a person for his actions and his subordinates actions
to his superior. In the context of given case, Harish, is both responsible and
accountable to Dasgupta for the achievement of sales targets. On the similar lines,
relationship of Dasgupta with that of General Sales Manager can also be defined.
However, at the same time, Dasgupta is also accountable to the General Sales
Manager for the work done by Harish.

Power refers to ability of an individual to gain influence and dominance over events,
things and beliefs in ways desired. Authority can also be associated with power, in the
sense that authority is form of power generally associated with formal organizations.
Thus, power may be based on the formal position or inherent in personality of an
individual. It can be found that Union President is not having any formal authority to
reinstate or give instructions to General Sales Manager for reinstatement of his
nephew Harish Mastana. However, he has the power by virtue of his position as Mill
Union Mazdoor President, since he can influence work behavior and actions of
workers of the company.
ii. Authority, power, responsibility, accountability, relationships have both positive and
negative impacts. It is only through such relationships an organization plans, works
and tries to achieve its objectives. It is only through flow of authority and
responsibility an organization exists and work is performed.
The peculiarity in the case lies in the power held by Mill Mazdoor Union President.
Positive impact of such power held by Union President is that it keeps a check on
Managers and make them cautious and alert. It will also force Managers to think of
other alternatives before resorting to any harsh treatment, such as retrenchment in
the above case. Moreover, agreeing to the suggestion of Mill Mazdoor Union
President will ensure smooth functioning of the company through union cooperation.

However, in the given case, it is highly likely that the impact would be towards the
negative side. There are chances that Dasgupta will feel demotivated to perform his

91
 duties. He will feel dejected and sad about the incident. He would be concerned
about encroachment of his authority by the power of union leader. On the other
hand, Harish will unnecessarily feel more powerful as compared to his superior. He
may continue with his casual approach towards his work by not meeting the
standards and expectations of the organization.
This will also give wrong signals to his colleagues, that work can be avoided in this
organization through union leaders or through the use of power tactics over the
management.

Thus such relationships can lead to anti-work environment in the company.

CASE # 4

(e) Social responsibility can be defined as the responsibility of a business

towards the society. A business responsibility can be towards:
1. Performing economic functions - Production & Supply of goods
2. Consideration of interests of the society
3. Undertaking economic activities
4. Promotion of education, removal of poverty, etc
5. Encouraging social welfare and preserving social values
Any successful organization or enterprise has social responsibility built into its
objectives, policies, strategies and plans and also their day to day functioning.

(f) The thermometer manufacturing plant in Ahmedabad was closed because

traces of mercury were found and that too in large quantities in the village where its
factory was located. Hence an issue was raised by the social activists on the
following grounds:
o Any business enterprise gets resources from the society and it manufactures
goods and services for the society. Hence, Healthy & Hearty (India) Ltd, a
business organization being a sub-system of the larger society has no right to
survive if it damages the society. A relationship between a business house and
the society can be maintained only through a socially responsible behavior.
o Social obligations form part of the ethics of business organizations.
o A business house involves a large number of groups who are interested in
the functioning of the organization. The expectations of the stakeholders should
be taken into consideration by Healthy & Hearty (India) Ltd.
o The objective of social responsibility promotes objectives of business houses.
o Every business house during its functioning has to take decisions.
Acceptance of social responsibility as one of the main objectives ensures that
the business house makes decisions in interests of the society. This objective
however was missing in Healthy & Hearty (India) Ltd.
o Since Healthy & Hearty (India) Ltd was not working in the direction of social
responsibility, the issue of goodwill was questioned.
o Healthy & Hearty (India) Ltd was trying to become a professional
organization without catering towards the needs of the society.

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(g) In case the state pollution board serves a notice, the Executive Director
should reiterate the fact that the company is extra conscious in its social
responsibility. At the same time, the Executive Director should emphasize on:
3) Installation of the state-of-art effluent treatment plant with zero discharge
facility
4) Green belt being around the factory

The Executive Director should argue in favor of Social Responsibilities of Business

by discussing the following points:

o A company gets resources from the society and it manufactures goods and
services for the society. A relationship between a business house and the
society can be maintained only through a socially responsible behavior.
o Business organizations are not only concerned about making money. Social
obligations also form part of their ethics.
o A business house involves a large number of groups who are interested in
the functioning of the organization. The expectations of the stakeholders should
be taken into consideration by all the business houses.
o The objective of social responsibility promotes objectives of business houses.
o Every business house during its functioning has to take decisions.
Acceptance of social responsibility as one of the main objectives ensures that
the business house makes decisions in interests of the society.
o Any business house working in the direction of social responsibility can avoid
imposition from the government.
o Working in the direction of social responsibility enables a business house to
improve its goodwill.
o All business houses are becoming professionals and professionalism
involves catering to the needs of the society.
o A business organization acquires social power through economic and
commercial activities and services. This social power needs to match with social
responsibility and then only it can avoid being misused.
o Companies and their management show initiative in economic matters. They
prove their worth and leadership in achievement of economic goals. Society also
has a right to expect from companies and their management a degree of
involvement, initiative, support and contribution in solving social problems.
(h) Devising of an action plan
Healthy and Hearty (India) Ltd. should:
(e) Stop making decisions and undertaking activities which seriously interfere
with the genuine interests of other sections of the society.
(f) Aim at serving their customers with whole-some products at fair prices,
treating their employees with decency and dignity, honoring the commitments to
their suppliers and creditors, honestly observing the laws of the land, and
adopting efficient production techniques.

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 (g) Consider the network of interest groups who have a stake in the effective and
efficient functioning of enterprises.
(h) Show social awareness, concern and commitment and uphold the values,
beliefs and interests of society and of the various groups therein.

CASE # 5
(d) The possible factors which made Beta Ltd. sell its brand (Yummy and Tasty) are:
Need for restructuring of its unmanageable product collection Beta Ltd.
realized that it was not able to manage the household brands namely, Yummy
and Tasty.
Low business potential for the company Yummy and Tasty turned out to be
minor or secondary businesses for Beta.
Unable to meet its objectives Some of the most important objectives of a
business enterprise are:

Survival
Profit maximization
Growth
Stability
Efficiency
Beta Ltd. realized that manufacturing of its brand (Yummy and Tasty) are not
in line with its objectives.
(e) Business Strategy for Alpha Acquisition strategy
Alpha International adopted Acquisition Strategy in order to achieve its growth
objectives.
Features of Acquisition strategy:
3. It reduces the time, risks and skills involved in assessing internal growth
opportunities and utilizing them in order to develop the necessary resource base.
4. Achieves a measure of synergy between the parent and the acquired
enterprises.
From the point of view of Alpha International, manufacturing of Tasty and Yummy
household brands would result in profits. The reason being that:
The company makes the same type of products and hence growth in its
brands without additional input or distribution costs.
Alpha International can use the same set of distributors to place these brands
(Yummy and Tasty) in shops. It would result in an increase of 5-7% in companys
turnover in the first year.
(f) Business Strategy for Beta Retreat Strategy
Beta Ltd. adopted Retreat Strategy in order to save its vital interests.
Features of Retreat Business Strategy Beta Ltd:
3. Beta Ltd. required assistance in order to cope up with adverse situations in
the environment Two of its brands Yummy and Tasty were not doing well.
4. Minimization of any negative impacts Retreat Strategy was adopted with an
overall view to help Beta Ltd. to regroup its resources and strive towards growth.

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 Generally, Retreat Strategy involves temporary and partial set backs, withdrawal of an
organizations products from the markets, sale of manufacturing facilities, etc.
Beta Ltd:
Planned for restructuring of its products
Decided in favor of selling off its low business potential products(Yummy and Tasty)

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 MANAGEMENT PROCESS & ORGANISATION
IMT GURGAON STUDENTS

Handout IV

Theoretical Perspectives:

+ Classical Organisation Theory

Scientific Management Theory

a) Proposed by Frederick Winslow Taylor, who is popularly recognized as the father of

'Scientific Management'

b) Brief history about Frederick Winslow Taylor:

Taylor was an engineer, scientist and practitioner in USA. This approach was mainly to
solve the work-related problems in order to improve the effectiveness and efficiency. When
he started his career as a machinist and a foreman, he was disappointed to see the way in
which the things were being done by the workers in his organization. He was brought up in
a culture of honesty, dedication, rationality, discipline and hard work, and he wanted to do
things in a rational and analytical manner. Taylor concentrated on the shop floor level
workers.

c) Initiatives taken by Frederick Taylor:

i. Taylor believed that by improving tools and equipments, efficiency

of the workers would increase apart from reducing their physical
strain.
ii. Time study designed to establish the standard time required to
carry out a job under specified conditions. It involves analysis of
job into its constituent elements and recording the time taken in
performing each element.
iii. Motion study, that is, a systematic and critical study of the
movement of both the worker and the machine so as to identify
and eliminate unnecessary and wasteful movements.
iv. Differential piece rate system-Taylor suggested that a direct link
should be created between remuneration and productivity for
motivating workers.

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 For Example, under this system two piece rates are laid down:
one, low rate for those failing to achieve the standard output and
the second higher rate for those achieving or exceeding the
standard output. Suppose the two piece rates are Re. 1 and Rs
1.50 respectively, Standard daily output laid down through time
and motion studies is 10 units. The daily wages of two workers A
and B who produce 8 and 12 units will be calculated as under:

A's wages = 8 units @ Rs 1= Rs 8

B's wages = 12 units @ Rs 1.50 = Rs 18

Due to significant difference in wages, A and other inefficient

workers will be under pressure to reach the standard output. B
and other efficient workers will be encouraged to keep their
output above standard.
v. Functional Foremanship: According to Taylor, one supervisor
cannot be an expert in all aspects of work supervision. He
suggested the system of functional foremanship in which eight
supervisors supervise a worker's job. Four of them are concerned
with the planning of work and the other four are involved in the
execution of work at the shop floor.
vi. He was in favor of scientific selection and systematic training of
workers. He emphasized right man for the right job.
vii. He stressed the need for creation of a good working
environment. For example, cleanliness within the organization.
viii. Taylor distinguished the roles and responsibilities of management
from those of workers. He said that management should take
responsibility for planning. He assigned the role of 'doing' to
workers to accomplish the work as per the instructions given by
the management.

d) Advantages of this theory:

It was directed towards increasing worker's productivity

Taylor's theory linked remuneration with output
Emphasis was laid on time and motion studies, work
measurement, simplification and standardization.
Improvement in tools and equipment was directly linked with
reduction of physical stress of the workers.
This theory distinguished the roles and responsibilities of
management from those of the workers.

e) Disadvantages of Scientific Management:

Mechanistic Approach: Taylor's theory ignores the human

element in production and is devoid of a human touch. It treats
workers as factors of production and not as human beings.
Unrealistic assumptions: Financial gain is not everything.
Workers also want job satisfaction, participation, recognition
and appreciation.

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 Narrow view: Taylor focused attention completely on efficiency
at the shop floor. It does not deal with management of the total
organization.
Impracticable: Many ideas of Taylor are said to be infeasible
in practice. For example, functional foremanship is likely to
create problems because it violates the principle of unity of
command.
Exploitation of Labor: In the name of increasing efficiency,
workers were forced to speed up affecting their physical and
mental health.
Taylor's theory was oriented towards organization goals.

f) Taylor's practical philosophy:

Science, not rule of thumb; harmony, not discord (dispute); co-operation, not
individualism; maximum output, not restricted output.

g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

Frederick -Remember how fed up you were when you first read this theory, fed becomes
fred, and Fred. FredFred. Frederick

Winslow - Best way to win is to win slowly. Hence the name Winslow

Taylor - Remember Mark Taylor, the famous Australian Captain or what comes after s, it is t
and scientific mgt theory gets recognized with Taylor (s-t)

Conclusion- Frederick Winslow Taylor

Frederick Winslow Taylor - Scientist - Engineer - Machinist - Foreman

Tools and Equipment - Time and Motion Study - Functional Foremanship -
Differential piece rate system
Shop Floor Level
Rational and critical way of doing things
Advantages
Disadvantages

Administrative Management Theory

A -Henri Fayol

While Taylor concentrated on shop floor level, theorists and thinkers such as Henri Fayol,
Max Weber focused on organization structure and management functioning.

a) Proposed by Henri Fayol

b) Brief history about Henri Fayol:

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Fayol started his career as a mining engineer and later became a chief executive. According
to Fayol, the role of a manger is to forecast, plan, organize, command, co-ordinate and
control.

c) Classification of Activities:
Fayol classified all business activities into six categories:

Technical (manufacturing or production of products),

Commercial (buying, selling and exchange),
Security (protection of persons and property),
Accounting (recording)
Financial (optimum use of capital),
Managerial

Remember: TCS AFM

d) Henri Fayol's 14 management principles:

1. Scalar Chain: It refers to the chain of superiors ranging from the ultimate authority to
the lowest level in the organization.
E
D F

C G

B H

A I
Scalar Chain and Gang-Plank

As shown in the above figure, if A wants to communicate with I, usually message will
move from A to E via B, C, D and from E it will come down to I via F, G and H. But if
it is essential to communicate immediately, a gang-plank (dotted line) may be
created between A and I without weakening the chain of command. This gang-plank
allows the two employees to deal directly with each other. But each must inform his
supervisor of any action taken by him.

2. Division of work: It refers to specialization of work and helps in producing more

products of better quality with same efforts.

3. Authority versus Responsibility: As per Henri Fayol, authority and responsibility are
related. Wherever authority is exercised, responsibility arises.

4. Unity of Command: An employee should receive orders from one supervisor only.

5. Unity of direction: There should be one head and one plan for a group of activities
having the same objective.

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 6. Discipline: It implies respect for the organization and its employees. That is, there
should be respect for the rules and agreements designed to secure obedience.

7. Order: This principle is concerned with the arrangement of things and the placement
of people. It implies that there is a place for everything and everything is in its place.

8. Stability of tenure of personnel: Employees cannot work efficiently unless job

security is assured to them. Management must strive to reduce employee turnover.
For example, a mediocre manager who stays should be preferred to an outstanding
manager who leaves the organization after a short duration.

9. Remuneration of personnel: The amount of remuneration and the method of

payment should be just and fair and should provide maximum satisfaction to both
the employees and employers.

10. Centralization: According to Fayol, the degree of concentration of authority should

be based upon optimum utilization of all faculties of the personnel. In other words, it
should be determined on the basis of individual circumstances in each case.

11. Equity: Equity implies employees should be treated with justice and kindness.
Managers should not be biased or partial in their dealings with subordinates.

12. Initiative: Employees at all levels should be given the opportunity to take initiatives
and exercise judgment in the formulation and execution of plans. Initiative refers to
the freedom to think for one self and use discretion in doing work. It develops the
interest of employees in their jobs and provides job satisfaction to them.

13. Esprit de corps: It implies unity of effort through harmony of interests. In other words,
it emphasizes on the importance of groups and teamwork.

14. Individual interests versus organizational interests: The interest of one employee or
group of employees should not prevail over that of the company. Efforts should be
made to reconcile individual interests with those of the organization. When there is a
conflict between the two, the interests of the organization should prevail over
individual interests.

e) Advantages of this theory:

Universality: All organizations face the problem of making

optimum utilization of scarce resources. The functions and
principles are applicable in all sorts of organizations.
Fayol recognized the need for managers to acquire and learn
certain abilities and skills.
All the principles are flexible.
The approach is regarded as dynamic enough to absorb new
thinking and new functions of management like, innovation,
etc.

100
 Compliance with unity of command principle ensures that the
deviations from the set targets are very less.

f) Disadvantages of Administrative Management Theory:

Too formal: Fayol theory is said to be very formal.

Vague: Some of the concepts have not been properly defined.
For example, the principle of division of work does not tell how
the task should be divided.
Inconsistency: Principles of administrative theory were based
on personal experience and limited observations. They are
generalizations and lack empirical evidence.
Contradictory principles: For example, unity of command
principle is incompatible with division of work.
No attention paid to workers
Historical value: This theory is less appropriate in the existing
environment. For example, present day managers cannot
depend entirely on formal authority and must use persuasion
to get the work done.

g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

Henri Fayol - Mining Engineer - Chief Executive

Classification of activities - TCS AFM
14 Principles
Organization as a whole
Advantages
Disadvantages

Comparison between Taylor and Fayol :

Basis of comparison Taylor Fayol

Emphasized on: Shop floor level Analysis of manager's activities

Focus: Improving productivity Improving overall

through work simplification administration through
and standardization general principles

Identity: Scientist Practitioner

What they did? Management of jobs Mgt of total

organization

101
Administrative Management Theory

B - Max Weber's Ideal-type Organization - Bureaucracy

a) Proposed by Max Weber.

b) Brief history about Max Weber:

Max Weber, a scientist, analyzed the formation and administration of public bureaucracies,
which happen to be the oldest form of organization. Weber evolved an ideal type of
bureaucracy as a conceptual model.

c) Features of Bureaucracy:

Max Weber's model is characterized by the following features:

1. Division of work: There is a high degree of specialization or division of labor

in a bureaucratic organization. Tasks are divided into very specialized jobs
and each member performs his specialized function in a predictable manner.
2. Rules and regulations: Detailed and rigorous rules are laid down to specify
and govern the work behavior of the employees.
3. Hierarchy of authority: A clearly defined hierarchy is created by downward
delegation of authority. Authority enables a person to give commands
needed for discharging duties at various levels. Each supervisor exercises
supervision and control on his subordinates with provision for appeal to
higher authorities in the prescribed manner.
4. Record keeping: Every decision and action is recorded in the form of written
documents and kept in its original as well as draft form.
5. Technical competence: Selection and promotion of employees are based on
their technical competence. Qualifications are prescribed for each
job/position.
6. Impersonal relations: Relations among the members of a bureaucratic
organization are impersonal and formal.

d) Advantages of Bureaucracy:

Specialization: Every member is assigned a

specialized a specialized task to perform.
Structure: A structure or form is created by specifying
the duties and responsibilities and reporting
relationships in a command hierarchy.
Rationality: A measure of objectivity is ensured by
prescribing in advance the criteria for decision-making.
Predictability: The rules, regulations, specialization
impart predictability and thereby ensure stability in the
organization.

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 Democracy: Emphasis on qualification and technical
competence makes the organization more democratic.

e) Disadvantages of Bureaucracy:

Rigidity: Rules and regulations in a bureaucracy are often rigid

and inflexible.
Goal displacement: Because of the rules so framed, the
objectives of the organization may be neglected.
Impersonality: A bureaucratic organization stresses
mechanical way of doing things. Organizational rules and
regulations are given preference over an individual's needs
and emotions.
Paperwork: Bureaucracy involves excessive paperwork, as
every decision must be put in writing.
Restricts people: Jobs are divided into categories, which
restrict people from performing tasks that they are capable of
performing.
Misuse of positions: People in a bureaucracy tend to use their
positions and resources for their own self-interest.

f) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

Think of a bureaucrat and try to link the above features/advantages/disadvantages with

him/her.

+ Neo-Classical Organisation Theory

Human Relations Movement

a) Proposed/Pioneered by: Elton Mayo

b) Brief history about Elton Mayo:

Elton Mayo is considered to be the father of neo-classical approach. He was the leader of
the team, which conducted the famous Hawthorne experiments.

c) What exactly is Human Relations Movement?

Human Relations is a socio psychological approach to management. That is, it suggests

that a business enterprise is a social system in which the group norms exercise significant
influence on the behavior and performance of the individuals.

Human Relations movement gave the main importance to human factors. It believed that
workers couldn't be motivated by economic rewards alone. They want social satisfaction at
the workplace. Managers should create such a climate in the organization that workers can
feel happy. For example, cordial supervision, job enrichment, participative decision-making,

103
etc. The main aim being to motivate the workers in such a way that they work together
productively, cooperatively, and with satisfaction and achieve organizational goals.

d) Basic Philosophy:

1. A human organization is a psycho-social system.

2. An organization operates through employees, and workers and hence their
needs should be assessed.
3. Employees along with money want recognition, appreciation, participation,
responsibility, etc.
4. An organization should recognize and respect its employees.
5. The management should cooperate with employees, by establishing
sympathetic, caring, and friendly relations with them.
6. The management should aim towards reducing the distance or the gap
between the management and the workers and they should aim towards
creating "one big happy family" of all members of the organization.
7. There should be no conflicts within an organization.
8. Efforts should be made to ensure a high degree of satisfaction, motivation,
morale and sense of security of workers.

e) Advantages of this theory:

Human Relations Approach helps to satisfy the social and

psychological needs of employees.
Satisfaction of employees is likely to increase productivity and
reduce costs.
Sound human relations can result in the optimum utilization of
resources.
Human Relations movement focuses on inter-personal
relations.
It highlights the "people side" of organizations. It therefore
avoids the imbalances caused by over-emphasis on technical
and administrative aspects under scientific management and
administrative theory.
The theory emphasizes on the fact that employees are human
beings and they are entitled to be treated with respect and
dignity.
A true concern for workers would yield rich dividends.

f) Disadvantages of Human Relations Movement:

1. Unscientific - Critics have questioned the scientific validity of the human

relations approach.
2. Shortsighted - Inter-personal relations are considered as an end in itself and
very little attempt is made to really understand the human behavior.

3. Unrealistic assumptions - Human Relations approach is based on over-liberal

assumptions about people, their needs, attitudes.

104
 4. Negative view of conflict - Human Relationists believed that conflict is always
bad and must be avoided. They failed to recognize conflict as a creative
force.

5. Happy workers are considered to be productive workers. But research has

revealed that no direct correlation exists between morale and productivity.

6. Anti-individualistic: Human Relations approach is directed towards people. It

replaces the control of the boss by the control of the group forcing the
individual to sacrifice his personal values to group norms.

7. Several shortcuts were created in order to keep the workers happy, example,
false feeling of importance and belongingness were given to workers,
managers resorted to socializing with employees in a superficial manner and
manipulating them to believe that management really cared for them.

g) Hawthorne Studies/Experiments:

Elton Mayo involved himself in these studies and in all four experiments/studies were
conducted.

(i) Illumination Experiments: In this experiment it was observed that

improved productivity could be brought about by not only improved
working conditions but also by promoting informal social relationships
among the workers.

(ii) Relay assembly test room experiment: In this experiment, improved

working conditions were introduced. For example, friendly and informal
supervision, shorter working hours and working days, free interaction
among group members, better wages, etc. The productivity and morale of
the group increased consistently during the period of the experiment.
Even when the improvements in working conditions were withdrawn,
productivity and morale of the group were not affected. It was concluded
that socio-psychological factors such as feelings of importance,
recognition, attention, participation, and lenient supervision resulted in
higher worker productivity.

(iii) Massive Interviewing Programme: A large number of workers were

interviewed to judge their attitudes and opinions on the factors influencing
productivity. It was found that the opportunity to talk freely about things
that are important to workers, informal relations, has a positive effect on
the morale and productivity of workers.

(iv) Bank wiring observation room experiment : In this experiment, a group of

14 workers was put under close observation. The pay of every member
was made dependent on the performance of the group as a whole. It was
found that the group had its own norms of performance and various forms
of social pressure were exercised to enforce these norms. As a result
output could not increase despite group incentive schemes.

105
h) Conclusions of Hawthorne experiments:

Influence of psychological, and social factors on the workers productivity

and satisfaction were highlighted.

The experiments also proved that informal groups and interpersonal

relations exerted more influence over workers behavior.

Friendly and cordial supervision, free communication, etc resulted in

improving worker's productivity and satisfaction level.
The importance of humanizing the relations between management and
workers were realized.
Many organizations started taking interest in the welfare and happiness of
workers. They initiated measures to socialize workers, to relax supervisory
styles, to improve working conditions, to encourage informal and inter-
personal relations, to show respect and warmth to workers, etc.

i) Drawback of Hawthorne studies:

(i) Illogical: Mayo has been criticized for implying that management is
always logical whereas workers are largely driven by emotions.
(ii) Unscientific: There was no systematic basis in the choice of work,
worker and the environment. The investigations were not carried out on
a systematic basis.
(iii) True but Irrelevant: The conclusions of Hawthorne experiments are true
but irrelevant. Some industrialists argue that the main object of a
business is to make profits rather than to keep workers happy.
(iv) Unrealistic assumptions: They focused on the human aspects of work
place and ignored other aspects in the organization.
(v) Too Obvious: Social psychologists argue that the findings of
Hawthorne studies are not new but were all known long ago.
(vi) Simple: The generalizations were also simplistic and nave.
(vii) The behavior of the workers were not natural but was affected by their
feeling of importance, attention and publicity they got.

j) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

Conclusion- Elton Mayo

Proposed by
Brief history
Philosophy
Advantages
Dis-advantages
Hawthorne studies - 4 experiments

106
Comparison between Human Relations and Scientific Management:

Human Relations Scientific Management

1. No universal principles 1. Principles for universal application

2. Focus on people 2. Focus on machines
3. Man is a social animal 3. Man is a economic animal
4. Motivation, job satisfaction 4. Time-Motion study, functional
Foremanship, wage incentives
5. Improvement in inter-personal relations 5. Improvement in productivity, and
efficiency

Behavioural Science Thinking (BST)

a) Practitioners of BST: McGregor (Theory X and Theory Y), Abraham Maslow (Need
hierarchy theory of human motivation)

b) Brief history about BST:

Behavioural Science deals with scientific analysis, investigation and understanding of

human behavior. There are three main branches of behavioural sciences:

1. Psychology - It is the study of individual human behavior

2. Sociology - It is the study of human behavior in groups
3. Anthropology - It is the study of physical, biological and cultural influences on
human behavior

c) Basic Assumptions and Propositions of BST:

Organizations are socio-technical systems

107
 Conflict in organizations is desirable in some cases. Conflicts and
co-operation co-exist in organizations
Individuals differ in terms of their attitudes, perceptions and value
systems. Therefore, they react differently to the same situation.
People working in an organization have their needs and goals,
which may differ, from the organizational goals. Management should
try and achieve a consensus between the organizational and
individual goals.
People's behavior as individuals may be different from their
behavior as members of a group.
A wide range of factors influence relations among people (inter-
personal relations).
People working together in an organization form their own informal
groups. Such groups have their own norms, culture and
communication systems.
Informal groups exercise a significant influence on the attitudes,
behavior and performance of employees.

d) Advantages of this theory:

It analyses and understands human behavior

The behavioural science approach highlights the need to
achieve both human, social and economic goals
It regards individuals as dynamic and different from one
another in regards to their needs and attitudes
This theory also highlights the significance of conflicts in
organizations
BST is a discipline concerned with scientific investigation

e) Disadvantages of Behavioural Approach:

Individualistic perspective: The Behavioural science approach

centers its attention on understanding of individuals
Simplistic: The behavioural science approach revolves around
a very simple aspect that individuals are different from one
another.
Time consuming: This approach deals with scientific
investigation, analysis and understanding of human behavior.
Behavioural approach lacks scientific validity
This approach errs by identifying management with
psychology
Biased towards groups and group behavior

f) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

108
 Pioneered by
Brief history - Psychology, Sociology, Anthropology
Assumptions
Advantages
Dis-advantages

Comparison between Human relations and Behavioural Approach:

Human Relations Behavioural Approach

Focus on individual, his needs and Focus in groups and group behavior
behavior
Highlights interpersonal relationships Highlights group relationships
Based on Hawthorne Experiments Based on human relations movement
Narrow scope Wide scope
Emphasis on motivation, morale, Emphasis on group dynamics,
informal
And job satisfaction organization, motivation via job enrichment
Conflict in organization is always Conflict may even be beneficial,
cannot
Quantitative Approach
destructive and (QA)
should always be always be resolved
minimized
Pioneered by Elton Mayo Pioneered by McGregor, Maslow
a) Proposed/Pioneered
Organizations areby: W.C.Churchman
purely social systems Organizations are socio-technical
systems
b) This approach is alsopsychological
Revolves around known as management
needs Regards science approach,
individuals as differentmathematical
from one
approach, decision theory approach, operations research approach. to their needs
of individuals another and dynamic in regards
and attitudes
c) What exactly is Quantitative Approach?

The Quantitative Approach follows scientific method. The scientific method

believes in the fact that every work follows rationality and is observable and
verifiable.

109
Scientific method consists of the following steps:

1. Objectives are stated or specified

2. Problem is defined
3. Assumptions are made
4. Data is collected
5. Assumptions are tested
6. Results are explained

Remember: OPA DAR

The scientific method is highly formal and aims at precision and perfection. In
order to arrive at perfection, it is essential to express relations and facts in
numerical, quantitative and mathematical terms. Mathematics defines and
expresses relations among variables in such a way that one best solution is
arrived at.

d) Features of QA:

9. Management is a series of decision-making. The job of a manager

is to secure the best solution out of a series of inter-related
variables.
10.These variables can be presented in the form of a mathematical
model, which consists of a set of functional equations, which
highlights interrelationship of the variables.
11.If the model is properly formulated and the equations are correctly
solved, one can secure the best possible solution to the model.
12.Organizations exist for the achievement of specific and measurable
economic goals.
13.In order to achieve the goals the optimal decisions must be made
through scientific reasoning.
14.The quality of management is judged by the quality of decisions
made in diverse situations.
15.Efforts should be made to ensure a high degree of satisfaction,
motivation, morale and sense of security of workers.

e) Advantages of this theory:

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 The quantitative approach underlines the great
importance of the study of diverse decision situations
and the means of perfecting them.
It emphasizes on factual data and logical analysis in
the decision making process.
Disciplined thinking is encouraged.
Complex relations among variables can be expressed
more efficiently.
Quantitative approach has led to electronic data
processing, management information systems, linear
programming and other techniques.
This approach has facilitated planning and decision-
making.

f) Disadvantages of Quantitative Approach:

8. It argues that management has no other functions except decision-

making.
9. This approach underrates the importance of the human element in
management.
10.Quantitative approach is a mechanistic approach (devoid of
reality). In real life, managers have to take decisions speedily with
inadequate data.
11.Time consuming: Full data gathering takes time.
12.Unrealistic assumptions: This approach involves unrealistic
assumptions. For example, all related variables are measurable
and have a functional relationship.
13.Unpractical: It suffers from the practical difficulty that the required
data cannot be kept fully up-to date and accurate.

g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

Conclusion - W.C.Churchman

Proposed by
Also known as
Intro about QA
Features
Advantages
Dis-advantages

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Comparison between Quantitative Approach and Scientific Management:

Scientific Mgt Quantitative Approach

Suggests use of scientific methods
research
Focuses on improving efficiency of
workers and machines by finding one
best way of doing things
3. Time and Motion studies
4. F.W.Taylor
5. Analysis of operating problems at the
shop floor level
Suggests application of operation
Focuses on finding right answers to
managerial problems
Mathematical and statistical techniques
W.C.Churchman
Analysis of mgt problems at all levels of
organization

Systems Philosophy (SP)

a) Practitioners of SP: Kenneth Boudling, Kahn

b) Brief history about SP:

System contains number of elements which are interdependent and interacting.

The main elements of systems approach are as follows:

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 1. An organization is a unified and purposeful system consisting of
several interconnected, interacting and interdependent parts.
2. The parts of a system are called sub-systems. Each sub-system
influences the other sub-systems and the system as a whole.
3. The position and function of each sub-system can be analyzed and
understood only in relation to other sub-systems and to
organization as a whole.
4. The organization as a system can be analyzed and understood only
by reference to its sub-systems.
5. Each sub-system derives its strength by its association and
interaction with the other sub-systems. As a result the collective
contribution of the organization is greater than the aggregate of
individual contributions of its sub-systems. This is known as
synergy.
6. Each system has a boundary that separates it from its environment.
The boundary determines which parts are internal to the
organization and which are external. For example, employees are
within the boundary and creditors; customers are external to a
firm.
7. The reaction or response of the environment to the output is known
as feedback. Feedback is useful in evaluating and improving the
functioning of the system.
8. Organizations operate on the principle that they have several
alternative ways of doing the same thing or achieving the same
goal.

c) Classification of systems:

Physical systems - Example, solar system, Ganga river

Mechanical systems - Implies systems which are
engineering in nature. Example, Sewing machine, motorcar
Biological systems - Those systems which observe a cycle
of birth, growth, decay and death. Example, human beings,
plants
Social systems - These systems are devised by man to
overcome problem of isolation. Example: Family
Open systems - An open system actively interacts with its
environment. By interacting with other systems, it tries to
establish exchange relationships.

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 Closed systems - A closed system is self contained and
isolated from the environment. It is a non-adaptive system. It
does not receive inputs often from other systems and does
not trade with the outside world. Example: An automatic
wrist watch

ENVIRONMENT

INPUTS OUTPUTS
TRANSFORMATION
PROCESS

FEEDBACK

Fig: An open system view of organization

d) Organization as an input-output system

Inputs imply human, physical resources taken from the environment.

An organization converts inputs using various processes into outputs (products
and/or services).

For example, an educational institution produces literate people.

An organization is hence an input-output system.

e) Advantages of this theory:

It aims at meaningful analysis of organizations and

their management.
It facilitates the interaction between organization and
its environment.
It guides managers to avoid analyzing problems in
isolation and to develop an integrated approach.

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 Systems approach provides clues to the complex
behavior of people in an organization.

f) Disadvantages of Systems Philosophy:

Too vague
Over-conceptual
The approach does not recognize the differences in
systems
Systems philosophy does not specify the nature of
interactions and inter-dependencies.
Unpractical: It cannot be easily and directly applied to
practical problems.
It does not offer specific tools and techniques for the
practicing executive.
It fails to offer a unified body of knowledge.

g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

Pioneered by
Brief history
Classification
Advantages
Dis-advantages

III. CONTINGENCY VIEWPOINTS (CV)

a) Practitioners of CV: Tom Burns, Joan Woodward, Paul Lawrence, James

Thompson

b) Also known as: Situational Approach

c) Brief history about CV: Contingency approach was developed by managers,

consultants and researchers who tried to apply the concepts of earlier
approaches to real life situations. They found that the concepts and techniques
highly effective in one situation failed to work in other situations. As per the
contingency approach, the best solution is the one, which meets the requirements

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of the given situation. In other words, there is no single best way of managing
applicable in all situations.

Contingency viewpoint is more than a mere matter of common sense.

Management should deal with different situations in different ways. In other
words, the effectiveness of any technique is contingent on the given situation. It
is the responsibility of management to analyze the situation and then choose the
right approach to deal with it.

Contingency approach rejects universality of management concept.

d) Features of Contingency Approach:

o Management is entirely situational. In other words, the

conditions and complexity of the situation determine which
measure or technique is applicable and effective.
o Management should therefore match or fit its approach to
the requirements of the particular situation.
o Management policies and practices must respond to
environmental changes.
o Knowledge and understanding of different principles,
techniques and styles of management is a must.
o Managers should understand that there is no one best way to
manage.

Example: An effective and efficient leader should change his/her style to match
the given situation. Thus, the contingency approach has applicability and
usefulness for all the functions of management.

In order to implement the contingency viewpoints, the managers have to take

four sequential steps:
1. Analyze and understand the situation
2. Study and examine the validity of various concepts, principles and
techniques
3. Make the right choice by matching the technique to the situation,
and
4. Implement the choice

e) Advantages of this theory:

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 Contingency approach provides a clear view of the
realities of the managerial job.
The contingency approach provides situation specific
solutions.
The approach is open-minded.
Contingency approach has commonsense value and
wide-ranging practical utility.
It promotes analytical, critical and multi-dimensional
thinking with the help of which managers can innovate
new and better approaches and widen their choice.
The contingency approach tries to integrate the
findings of the earlier approaches and it makes an
effort to make them contingent on the demands of the
situation.
The contingency approach accepts that organizations
and their environment are too dynamic to be always
effectively managed in the same manner. Managers
must be capable of changing their approach and style
to match the changes in the environment.

f) Disadvantages of CV:

It adds confusion to the practice of management by

stressing that everything depends on situation.
The manager has no tested and proven prescriptions
to depend upon.
Unrealistic: Without a theoretical foundation, it is
impossible to research, or develop a knowledge base.
Unpractical: The approach does not incorporate all
aspects of the system theory.
Very complex theory
Simplistic: It is also said that there is nothing new in
contingency theory because classical theorists also
advised managers to use principles in the light of
changing conditions.

g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

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 Pioneered by/Practitioners
Also known as
Brief history
Features
Advantages
Dis-advantages

Comparison between Systems approach and Contingency

Approach:

Systems Approach Contingency Approach

1. An organization is goal oriented
effectiveness
Consisting of interdependent and is dependent on specific situations.
Interacting sub-systems.
2. Treats all organizations alike irres
pective of its size, culture
3. Input-output process, synergy, open
system, are the main concepts
4. Recognizes mainly the interactions
among system and sub-systems
5. Neutral on the universality of
principles
6. Main focus on internal environment
7. Pioneered by
Kenneth Boudling, Kahn
Organization are complex and its
Treats each organization and each situation
as a unique entity
No specific concepts
Attempts to identify the nature of interactions
Rejects the universality of principles
Main focus on external environment
Pioneered by Tom Burns, Joan Woodward, Paul
Lawrence, James Thompson

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